Chancellor John Healey is using government reserves to fund defence spending, drawing sharp criticism from Labour MP Tan Dhesi. Dhesi warned, "We risk leaving ourselves seriously vulnerable in the event of a major conflict." The Institute for Fiscal Studies said meeting the 3 per cent target requires £11bn more yearly.
Chancellor accused of kicking security 'into the long grass' by Labour chair of defence committee
Chancellor John Healey is using government reserves and betting on public-private partnerships as he seeks to increase defence spending towards the goal of 3 per cent of GDP by 2030.
Healey's Budget was heavily criticised by Tan Dhesi, a senior Labour MP and chair of the Commons Defence Select Committee, who accused the chancellor of kicking security "into the long grass".
"We risk leaving ourselves seriously vulnerable in the event of a major conflict," Dhesi warned.
His intervention provoked a strong rebuttal from Wes Streeting, the defence secretary, who said it was "completely unfounded" and added: "I don't care if he's the chair of the Defence Select Committee."
Meeting the 3 per cent target will require an extra £11bn in spending a year, the Institute for Fiscal Studies think-tank said on Thursday. The government is not expected to set out full details until next year's spending review.
Wednesday's Budget did reveal that Healey will partially fund the extra £4.7bn required by the Defence Investment Plan (DIP) by using departmental reserves, which are intended for unforeseen contingencies.
Former chancellor Rachel Reeves was critical of the last Conservative government for using such emergency buffers for asylum costs within the Home Office.
"It would be a shame if we returned to these sorts of spending management practices," said Bee Boileau, an economist at the IFS. "That is really not what the reserve is for."
The Treasury called the move "fair and balanced" in its Budget document. It also found money for the DIP by "reprioritisation" of department budgets to free up £3bn.
Healey also suggested that the government wanted to use more "innovative financing" to boost defence commitments as well as new PPPs.
Officials said more details would be provided in a defence finance and investment strategy this autumn.
UK defence figures expressed scepticism about new PPPs. One person warned that the plan could resemble "PFI Mark II -- and become an absolute shambles", a reference to the controversial public finance initiative model used by Sir Tony Blair's Labour government to build infrastructure such as hospitals and schools.
The chancellor also gave notice at the Budget that he would press ahead with treaty negotiations to establish the Multilateral Defence Mechanism -- a venture with the Netherlands, Poland and Finland, aimed at boosting investment and improving joint procurement -- to help Britain reach the 3 per cent spending target.
The plan sketched out this year is for the MDM to operate like an international financing institution, with a mix of guarantees and paid-in capital from participating countries.
Offering a personal anecdote to stress his commitment to funding the military, Healey recalled how his son, a British Army reservist, "came back four years ago from early training to say they had no kit and they had no bullets to fire". He accused the Conservatives of having "hollowed out" the armed forces.
But while his promise to increase defence spending was viewed as a step forward, it remained "aspirational until it's fully funded", said Ed Arnold, senior associate fellow at the Royal United Services Institute think-tank.
He warned: "The government thinks it has set out that path [to 3 per cent military expenditure], but only on a graph. That doesn't do much in terms of their credibility."