UK defence spending debate gets real
What does 3% of GDP buy and why do we need it?
With Grant Shapps’ call for the UK to spend 3% of GDP on defence — though at an unspecified date — political momentum is building for a sustained uplift to the MOD’s budget.
The three unanswered questions in British defence policy circles remain, however: by how much, why and how to spend it?
Astonishingly, two years on from the full-scale invasion of Ukraine, and with the prospect of a Trump administration taking US troops out of the NATO command structure, the UK has made no clear strategic determination of its future role in NATO and no uplift to Defence spending.
It is the only NATO country without a National Defence Plan. And the 2023 Defence Command Paper proudly made no changes to force structure and commissioned no new platforms, because “we stand by what we wrote in 2021”.
In this post I’ll outline the parameters for the strategic determination the UK needs to make — either during Labour’s proposed SDSR in 2025 or before that. I’ll leave the comments open on this one, and use Twitter/X to stimulate some debate around it.
Question 1: Why do we need a Defence spending uplift?
So far the UK debate on Defence spending has been framed around “black holes” and “capability gaps”. The reappearance of a >£17bn black hole in the Ten Year Equipment Plan — where planned capabilities are not budgeted for — isn’t just a fiscal problem: it creates a deterrence gap.
If a country talks tough on the global stage and doesn’t back that up with economic deterrence, then the credibility of its military deterrence crumbles. Alongside that, there are clear gaps in UK military capability.
For example, the long-promised “modernised warfighting division” cannot happen until Ajax is delivered, Warrior replaced, the tedious competition for a 155mm howitzer solution brought to completion, and all 148 Challenger tanks upgraded. And of the 138 F-35B combat aircraft the UK says it wants, it has only been prepared to order 72.
The list is long — but at present we’re thinking about this problem like they were in the early 1930s: as “deficiencies” to be remedied rather than components of a clear and prioritised deterrence plan.
So what the UK needs to do is make a clear strategic determination. We know what the main threat is: Russian aggression against a NATO ally. What we don’t know is the likelihood, the circumstances or the timing.
The percentage certainty of a Russian attack on, say, the Baltics in the next 5–8 years, looks contingent on three factors:
- Does Trump win in November 2024 and pull US troops out of NATO?
- Does Ukraine get forced into a Minsk III deal?
- Does the European will to collective self defence crumble?
Passionate though I am about resisting each of these outcomes, you can’t make Defence policy on the basis of hit-and-hope.
If America walks away that’s existential for NATO. It leaves Britain, France, Germany and Poland as the effective guarantors of European security — and poses the question: are their populations up for it?
If Ukraine is forced into a Minsk III, that’s not just a massive blow to Western credibility, a tragedy for Ukrainians and a political crisis for both NATO and the EU. It would also green-light the possibility of China rearming Russia.
So my answer to: “why rearm?” would be — as an insurance policy against the collapse of our collective security arrangements, and to create adequate conventional deterrence.
Question 2: How much should the UK spend on Defence?
In a poll for the Council on Geostrategy last week I said there are three options: 2.5% of GDP, 3% of GDP or 6% of GDP. And that’s just in the rearmament phase. In any period where conflict with Russia was adjudged likely we would be looking at full-scale economic and social mobilisation. It’s a scary thought, but if politicans are not prepared to explore the options, they’re not doing their jobs.
Let’s approach the problem reductively. If we stick with 2.2% of GDP for the rest of the decade, none of the capability gaps will be plugged; the black hole will get bigger; the recruitment crisis will get worse; the availability of major platforms/formations — eg Carrier Strike and maybe even CASD — will become strained. So 2.2% is a non-starter.
If you raised Defence spending to 2.5% of GDP now, in mid year, and stuck with it until 2028–9, you would add around £45bn over five years to the MOD budget. If you went to 3% in 2025–6 you would add around £100bn over five years. If you steadily increased the money, year on year, to 6% of GDP, you would get a ballpark £300bn to spend.
The first two options could be paid for out of taxation. In fact 2.5% could be paid for just by reversing the National Insurance cut Sunak made — showing that his “aspiration” for 2.5% could have been met last month. But there’s no way to spend 6% without doing what they did in the 1930s — raise a specific defence loan.
So the options stack up, geopolitically, like this.
- 2.5% is a no-brainer and has to happen asap otherwise the UK’s conventional deterrence narrative just lacks credibility.
- 3% is a marker for greater UK leadership in NATO and would fund both a serious uplift to support for Ukraine, and plug some capability gaps.
- 6% is an insurance policy in case the **** hits the fan — but given the shrunken Defence industrial base, and the technological nature of modern warfare, you might struggle to spend it all, even if you were prepared to raise it. A portion of the of the money and effort would inevitably have to go on rebuilding industrial capacity, skills and resilience.
Question 3: What should we focus the spending on?
This is actually the unresolved question in British strategic thinking. Now we’ve moved on from the Indo-Pacific Tilt, there is still a strong case that maritime power is Britain’s strength and, together with the nuclear deterrent, our main contribution to NATO. However, as Gen Sir Patrick Sanders noted repeatedly: mass and land combat are being proven critical in the Ukraine war.
Britain could take a strategic decision to let others (Poland, Germany, Finland) take the strain of land warfare, but it would lose authority and — in conditions of a Trump walk-away — the position would not be tenable. With NATO moving to division-centric land warfare, if you don’t have a war fighting Division you are not really in the game.
So for me any UK rearmament programme has to fulfil four irreducible tasks, in this order:
- Guarantee the UK’s nuclear deterrent always provides a credible “second centre of decision making” (because that’s the bedrock of our self-defence).
- Give the forces a pay rise and upgrade the accommodation they live in (because this is a ticking time bomb given social attitudes and demographic change).
- Plug the black hole in the Equipment Plan (because it’s damaging to the UK’s ability to deter aggression).
- Field a modernised warfighting division, with some elements forward deployed in Europe (so that UK can be in the game of division-centric land warfare, and wield clout inside NATO).
If you tried to do that with £44bn over five years, £9bn would have to go on filling the black hole. It might take £5bn to properly upgrade the pay and experience of servicepeople. I’ve seen an estimate of £10bn to fully modernise and enhance 3 (UK) Division in light of the experience of Ukraine (Challenger, Ajax, Boxer, a Warrior replacement, tactical EW and a lot more indirect fire weapons — plus replacing Bowman). So that leaves, say, £20bn to cover ramping up production of complex weapons for Ukraine, ordering more F-35Bs and the RAF’s likely priority of two more Wedgetails.
In the 3% scenario, which generates £100bn over five years, I would prioritise:
- Integrated Air and Missile Defence (at least £10bn);
- Buying the full complement of F-35s and arming them for precision strike;
- GCAP — giving the UK certainty it will own some of the IP on a future stealthy combat aircraft (because Trump might not be the last isolationist);
- AUKUS, adding three SSNs to the seven planned, and ramping up the cyber, autonomy and quantum aspects of Pillar 2.
In the 6% scenario you could have all of the above, and in addition a significantly bigger army and reserve, as called for by Gen. Sanders. You could also fund a comprehensive resilience programme for our defence, energy and defence-industrial infrastructure — distributed airfields etc. In addition you could do more to fill gaps in the nuclear escalation ladder, perhaps by investing in dual-capable aircraft (more to come on this in future newsletters).
But you would probably struggle to create the capacity to do much more in the short term. You could invest in, for example, land-based anti-ship missiles, or some quickly buildable surface combatants, but you might have to buy a lot of kit off the shelf, at a time when the USA, Nordics etc are all prioritising their armed forces.
Get on with it…
What’s frustrating about the current debate is that it’s not based on a real-time and challengeable assessment of the threat. The 2023 Integrated Review refresh came nowhere near properly quantifying the threat of catastrophic failure that confronts Europe if the worst case happens.
We’re lacking a responsible forum, like the Defence Requirements Committee in 1933–4, where a definitive assessment of the threat is matched by a renewed force commitment and the political willpower to pay for it. Nobody in politics wants to address this openly, so I will leave you with the words of a man who did.
In 1938 — six months before he resigned in disgust at the Munich deal — Alfred Duff Cooper, the First Lord of the Admiralty, called for an end to Treasury “rationing” of defence spending. With news of the Anschluss fresh in his mind, he wrote to the Cabinet:
“The first duty of a government is to ensure adequate defences of the country. What these adequate defences are is certainly more easily ascertainable than the country’s financial resources. The danger of under-rating the former seems to me greater than the danger of over-rating the latter, since the one may lead to defeat in war and complete destruction, whereas the other can only lead to severe embarrassment.” *
I think that puts it better than I can.
- Shay, Robert P. British Rearmament in the Thirties: Politics and Profits, Princeton, 1977, p201
This post first appeared on my Substack newsletter.
