The UK Government’s Defence Investment Plan (DIP) was finally published last week to predictably mixed reviews from the British media and commentariat. It is the outcome of a tortuous process begun with the launch of a ‘first-of-its-kind’, externally-led Strategic Defence Review (SDR) in mid-July 2024 – one that was dogged from the start by an unclear budgetary envelope.
The DIP does not set a visible trajectory towards achieving the government’s commitment to spend 3 per cent of GDP on defence in the next Parliament or to meet the 2025 NATO Hague Summit’s agreement to spend 3.5 per cent of GDP on core defence by 2035. And even for the remaining years of this Parliament, the plan appears to contain a £1.2 billion per year funding shortfall. That money will need to be found.
Protracted deliberations between the Ministry of Defence (MOD), the Treasury and No 10 over the size and shape of the future defence programme are nothing new. But this time they were uniquely public and theatrical – watched with concern not only by observers in the UK but among key allies and partners.
The government should ensure that such a conceptually flawed process is also the last-of-its-kind.
Novel technologies
The DIP says that it is built around three key areas: ‘Transforming the Armed Forces’; ‘Backing British’ [technology, industry and skills]; and ‘Stepping up UK leadership’. The last will be of particular interest to the UK’s NATO allies, as the US announces plans to reduce its conventional forces in Europe and President Donald Trump continues to criticize the organization. European countries must step up to fill the gaps left by the US. How credible does UK leadership look, as the NATO summit convenes this week?
In terms of the raw numbers, the UK’s once vaunted status as the top defence spender in Europe has gone. By 2030, Germany plans to spend €188.4 billion – 3.7 per cent of GDP – twice the UK figure of £79.1 billion (2.7 per cent of GDP). The UK now appears to be falling (slightly) behind France too. But it is still one of NATO’s biggest spenders, so how it spends its money is important and influential. On this, two points stand out.
First, the DIP involves a significant shift in spending towards novel technologies including considerably more on autonomous systems, digital infrastructure, drones and the ‘hybrid navy’. It also better reflects the realities of contemporary warfare, as practised by Russia and Iran, by enhancing investment in integrated air and missile defence.
And it deliberately retains increasing levels of a central contingency holding of unallocated money – allowing the MOD to respond more easily to future developments in the rapidly evolving character of warfare. This is something which previous UK defence planners often aspired to but rarely achieved. While the sharp growth in Germany’s defence expenditure is welcome, commentators have noted that relatively little of it is for ‘new-paradigm systems’.
International collaboration
Second, the DIP is unashamedly international in content and tone. The UK has long collaborated with the US and European allies on many of its biggest defence programmes. Despite this – and a commitment in 2015’s Strategic Defence & Security Review to make UK Defence ‘international by design’ – previous UK governments have too often been transactional and case-by-case in their approach.
Building on the SDR’s restatement of the importance of international collaboration, the DIP finally tries to take a more strategic approach, outlining a clear policy preference for ‘further develop[ing] capability co-operation with our closest allies and partners’, stating that ‘international partnerships will be considered from the start of capability development’. The plan also recognizes that such collaboration is a cornerstone of wider international engagement, particularly in the Euro-Atlantic, the Middle East and the Indo-Pacific.
Fittingly, two big winners from the DIP are collaborative programmes: the Global Combat Air Programme (GCAP) to build a next generation fighter jet, a partnership with Italy and Japan; and AUKUS, a nuclear-powered submarine and novel technologies agreement between the UK, US and Australia. There are further commitments: to work with Germany on deep precision strike weapons and close support artillery; and to explore a new amphibious combined fleet with the Netherlands.
Such commitments have previously been hampered by bureaucratic structures and processes that clumsily privilege financial accountability over strategic vision.
This time, the policy aspiration is supported by a new structure – the National Armaments Director Group (NADG) – which could be seen as the UK’s belated counterpart of France’s formidable Direction Générale de L’armament.
The NADG will take a portfolio (rather than case-by-case) approach to acquiring capabilities – which should allow a more flexible approach to international collaboration – and will have a strong international pillar.
Much of the rest of the DIP will be of limited interest to NATO partners. But one other point is notable: the revised defence spending profile over the next four years shows a relatively small but tangible increase in ‘Resource DEL’ – broadly, day-to-day running costs – with the intention of improving readiness.
Well-publicized events earlier this year raised serious doubts among allies about the readiness and deployability of the UK’s armed forces, so this commitment should be welcome.
No more over-promising?
In summary, the DIP is likely to viewed as a mixed bag by the UK’s NATO partners. Its gestation has been painful for them to watch. Its plateauing of UK defence expenditure at 2.7 per cent of GDP from 2027/8-29/30 will raise eyebrows. So too will the ever-increasing proportion of the UK’s defence budget (from 20 to 25 per cent) the plan allocates to the UK’s defence nuclear enterprise.