Streeting denies 'kicking can down the road' in defence spending row

Spending 3% of GDP on defence means the government would devote an amount equal to 3% of the UK’s annual economic output to the Armed Forces and related defence needs by 2030. GDP is the total value of goods and services produced in the economy, so the cash amount can change as the economy grows or shrinks.

The article gives a clear comparison. UK defence spending is estimated at 2.6% of GDP this year. Reaching 3% would therefore require a larger share of national income to go towards military equipment, personnel, infrastructure and other defence capabilities.

The target is politically important because ministers have not yet published a precise pathway to reach it. Defence analysts say the government may need an additional £10bn each year. Wes Streeting argues that the wider spending review should decide the increase, while critics say delaying the pathway risks leaving capabilities underdeveloped.

The UK currently spends an estimated 2.6% of GDP on defence. Its government has promised to reach 3% by 2030, while the article also mentions a Nato-wide target of 3.5% by 2035. These figures show why the increase is being closely watched.

The article does not give a definitive annual cost for reaching 3%. Instead, some estimates suggest the government may need to spend an additional £10bn each year. That money would support military capabilities, equipment and other defence requirements, although the final amount would depend on future economic conditions and government choices.

The gap has become a political dispute. Tan Dhesi wanted a precise pathway in the Budget, while Wes Streeting says extra money is already funding capability. The government plans to consider the full cost in a future spending review, which could take place in the second half of 2027.

“Kicking the can down the road” means postponing a difficult decision rather than resolving it now. Wes Streeting is accused of doing this because Wednesday’s Budget did not set out a precise pathway for reaching 3% of GDP on defence by 2030.

Tan Dhesi, chair of the Commons defence committee, said important decisions had been pushed into next year’s spending review. He warned that delaying investment in capabilities could leave the UK seriously vulnerable during a major conflict. The committee repeated that criticism the following day.

Streeting strongly disagrees. He points to extra money already entering defence, including the £4.7bn hole plugged in the Defence Investment Plan. He also says the spending review is the right place to weigh defence against other national priorities. The review has no fixed date and could come in the second half of 2027.

The new offset rules are designed to make foreign defence procurement create more economic value inside the UK. Under the policy, overseas firms awarded defence contracts worth more than £50m must invest an equivalent amount back into Britain.

For example, a company receiving a qualifying £100m contract would be expected to commit £100m to British factories, jobs and training. The Ministry of Defence will apply the rules case by case from April 2027. The government describes this approach as an “offset strategy”, rather than simply buying equipment from abroad.

Ministers hope the policy will strengthen Britain’s defence industry while making increased military spending more politically acceptable. Similar rules already operate in Poland, Norway and the Netherlands. However, the article indicates that the rules are intended to increase domestic investment without directly committing the government to spending cuts elsewhere.

Increasing defence spending can have several effects at once. It could strengthen military capability by funding equipment, infrastructure and other requirements. The new offset rules are also intended to ensure that some defence money supports British factories, jobs and training rather than flowing entirely to foreign companies.

The article gives a practical example through the new contract rules. A foreign firm winning a defence contract above £50m would need to invest an equal value in Britain. That could generate domestic industrial activity and skills while supporting the government’s defence target. The Budget also plugged a £4.7bn hole in the Defence Investment Plan.

There are trade-offs. Streeting said higher defence spending comes at a cost to the country and to other things the government wants to fund. Departments were asked to cut capital budgets by 1% to help defence. Conservatives instead argued for welfare cuts, while James Cartlidge criticised borrowing.

The government has not settled the full defence spending pathway in the Budget. Wes Streeting says ministers should wait for the spending review, because it allows them to examine defence spending “in the round” alongside other public priorities. The review does not have a fixed date.

This means major decisions about the scale and timing of increased investment remain open. The government has already plugged a £4.7bn hole in the Defence Investment Plan, partly by asking departments to reduce their capital budgets by 1%. It also plans to apply the new offset rules case by case from April 2027.

Critics believe delay creates risks. Tan Dhesi wanted a precise plan immediately and warned that the UK could remain vulnerable without building capabilities now. Streeting says funding is already improving capability and that waiting is responsible. The future review could take place in the second half of 2027.

Governments decide defence’s share of national income by weighing security needs against competing demands, such as public services, investment and debt. They also consider military capability, threats and commitments to allies. The article shows this tension: ministers want stronger defence, but Streeting says it comes at a cost to other things the country would like to fund.

GDP is useful because it measures the size of the economy. Setting defence at 3% links military spending to the country’s economic capacity, rather than fixing one cash figure forever. If the economy grows, 3% generally produces a larger budget; if it contracts, the amount can fall. This makes comparisons between years and countries easier.

The article shows the political consequences of this choice. The UK spends an estimated 2.6% of GDP this year and aims for 3% by 2030. Analysts say that may require £10bn more annually, while ministers have postponed the precise pathway.