The Treasury's admission that it has not conducted analysis into the financial implications of meeting the UK's defence spending target of 3.5% GDP highlights a significant gap in the government's planning. The pledge to meet this target by 2035, as committed to by Labour leader Keir Starmer, will require a substantial increase in funding – estimated to be an additional £30-40 billion, equivalent to a 3p to 4p hike on all rates of income tax.
Lucy Rigby, Chief Secretary to the Treasury, was pressed repeatedly during a joint session of the Treasury and Defence Select Committees about whether her department had examined the necessary trade-offs for achieving this target. She confirmed that no analysis had been undertaken, stating simply "no" when asked directly if the Treasury had considered the short-term or long-term financial implications.
The scale of the financial commitment required to meet the 3.5% target is substantial, and MPs on both sides of the committee questioned whether there was a clear plan in place for securing the necessary funding. Ms Rigby acknowledged that such a significant shift would necessitate a debate about 'public consent', but failed to provide any details on how this would be achieved.
The lack of a clear spending plan has been cited as a factor in recent criticisms of the government's defence spending, including the resignation of John Healey as Defence Secretary. While the recently published Defence Investment Plan committed an additional £15 billion to the Ministry of Defence over four years, taking spending to 2.7% GDP, Ms Rigby conceded that an extra £4.7 billion would still need to be secured in the autumn budget.
The discussions also highlighted historical tensions between the Treasury and the Ministry of Defence, with some committee members pointing out that the government's approach of announcing projects without fully funding them immediately was akin to 'black hole' in public finances – a criticism made by the Labour Party two years ago.
These revelations underscore the significant financial challenges facing the UK in meeting its NATO commitments and raise questions about the long-term fiscal planning within government departments, particularly as a general election looms and a new administration is expected to take office.