The incoming UK government will face the challenge of securing an additional 4.7 billion pounds to finance the defense investment plan announced by the outgoing prime minister, according to a defense minister.
Luke Pollard told the BBC that the next chancellor, regardless of who it may be, must "find the resources" in their autumn budget. Outgoing Prime Minister Sir Keir Starmer announced a 15 billion pound spending increase over the next four years to bolster the nation's defenses. However, the Treasury has indicated that only 10.3 billion pounds in savings have been identified so far, leaving a shortfall that the next administration will need to address.
Pollard noted that "just over 4 billion pounds will be set out in the autumn Budget," adding that this approach is "pretty standard fare for the government to make an announcement and set out the details at the forthcoming budget." He recalled that the previous government employed similar methods on multiple occasions.
Andy Burnham, widely expected to become prime minister on July 20, is anticipated to appoint Energy Secretary Ed Miliband as the next chancellor, replacing Rachel Reeves. Pollard mentioned that Reeves had allocated additional funds for emergencies and unforeseen circumstances, referred to as "headroom," in her budget last November. He stated it would be "up to the next chancellor, whoever that may be, to allocate both the headroom and the resources in the budget this year."
Pollard, a supporter of Burnham, revealed that Burnham was informed of the 4.7 billion pound defense funding gap on Tuesday. "Downing Street have a close dialogue with Andy's team… I understand they've been keeping him close to the process, and told him yesterday when the Treasury published the statement and the breakdown of the financial costs," Pollard told Sky News.
In a speech on Tuesday, Starmer outlined the defense investment plan (DIP), initially anticipated last autumn, as a measure to reverse what he described as the "corrosive hollowing out" of the armed forces under the Conservative government. The plans aim to increase overall defense spending from 2.6% of national income in 2027 to 2.7%, or nearly 80 billion pounds, by 2030. Starmer indicated the UK was on track to spend 3% of GDP on defense in the next five-year Parliament, though he did not set a specific date for this target, a point defense chiefs and former Defense Secretary John Healey had advocated for.
Sir Keir stated the DIP would position the UK to meet NATO's defense spending target of 3.5% of GDP by 2035. He ruled out further borrowing to fund the increase, with the funds to be sourced by reducing the long-term investment budgets of other government departments by 1%. The Department for Transport is expected to save an additional 700 million pounds from roads projects, with the A38 Derby Junctions and A46 Newark Bypass schemes being considered for cancellation. The Department for Energy Security and Net Zero (DESNZ) is set to find a further 2 billion pounds from its budget, with more detailed plans anticipated in the autumn.