Streeting denies delaying UK's path to 3% defence spending

Defence Secretary Wes Streeting has denied that the government is "kicking the can down the road" over how much the UK spends on defence, after Wednesday's Budget did not set out a pathway to meeting its target of 3% of GDP by 2030.

Streeting is at odds with MPs on the cross-party Commons defence committee, whose Labour chair, Tan Dhesi, said key decisions had been "lamentably delayed" to next year's spending review. Streeting described the criticism as "unfair" and "unfounded".

New rules for foreign contractors

Alongside Chancellor John Healey, Streeting announced that foreign firms awarded defence contracts worth more than £50m will be required to invest an equal value back into the UK.

The government described the "offset strategy" as requiring those companies to spend an equivalent amount on British factories, jobs and training. The Ministry of Defence will apply the rules on a "case-by-case" basis from April 2027, and the two ministers were due to set out the policy on a visit to BAE's shipbuilding site in Glasgow.

The government said Poland, Norway and the Netherlands have mandated similar rules to boost the economic benefit from defence procurement.

Committee stands by criticism

Dhesi told BBC Radio 4's Today programme on Thursday that the committee stood by its criticism. "We had hoped to see that the chancellor would set out a precise pathway to spend 3% of GDP on defence by 2030," he said. He warned that without building capabilities now, the UK risked leaving itself "seriously vulnerable in the event of a major conflict". He did praise the government for plugging a £4.7bn hole in the Defence Investment Plan in the Budget by asking departments to cut capital budgets by 1%.

Streeting responded: "I like Tan very much, he's a friend and I respect him, but I strongly disagree with him." He said the charge of delaying "doesn't stack up against the extra money that is already going into defence and the capability we're funding right now".

He told BBC Breakfast the new rules, aimed at creating "bang for the British buck", would help reach the target. Waiting for the spending review - which has no fixed date and could come in the second half of 2027 - was "the right thing to do" so ministers could look at "spending in the round". He said the UK was ready to deal with hostile threats but "we're not where we'd want to be", adding: "There's no sugarcoating the fact that our Armed Forces were under-invested in for more than a decade."

Pressure over the target

Defence analysts have questioned the government's ability to deliver on the 2030 target, or the Nato-wide target of 3.5% by 2035. UK defence spending is estimated at 2.6% of GDP this year, and some estimates suggest an additional £10bn a year would be needed to reach the targets.

Tory leader Kemi Badenoch said on Wednesday that Healey "failed his own test" by not setting out a "plan for 3%" in the Budget. Healey resigned as then-prime minister Sir Keir Starmer's defence secretary in June over not spending enough on defence.

In the Budget, Healey said the UK was negotiating with Finland, Poland and the Netherlands to set up an international bank to boost defence investment and joint procurement. Opponents also raised concerns about the lack of detail on welfare reform, with the Tories demanding welfare be cut to fund defence.

Source: BBC Business.