“Defence & Deceit”. 2026 Defence Investment Plan

Prefer audio? Listen to the recorded version below.

In February, I published “Peace and Perversion”, an analysis of Donald Trump’s National Security Strategy. Continuing the geostrategic theme, my analysis here is a critique of the new UK Defence Investment Plan. It would be nice to say that I wish you a good read; entitled “Defence and Deceit”, you may not feel that way when you have finished it.

“Praise the Lord and pass the ammunition”

The UK has a new Defence Investment Plan (DIP); praise be indeed! It is nine months late; it was achieved at the cost of both a Secretary of State for Defence and one of his ministers resigning as well as creating much strife between the Ministry of Defence, the military chiefs and the Treasury; it sealed the fate of a prime minister. But at least we have it.

Consistent with the overarching Strategic Defence Review published 13 months ago (which itself was at least five months delayed), the DIP significantly redefines the means by which UK armed forces will wage war. It is a profound shift towards integrated drones and pilotless/crewless warfighting systems that recognises the revolution in warfare created since 2022 in the Russia-Ukrainian and Iranian conflicts.

Superficially the DIP might be summed up as the “Curate’s Egg”: good in parts. However, following a deep analysis of the 80-page document, a more accurate culinary analogy is a confection more akin to cold rice pudding: beneath a thin skin of substantive and precise programmes over the near-term, there is a disconcerting mush of ill-defined and finger-in-the-air longer-term aspirations.

A constant criticism of mine is that for all its rhetoric, the government really does not “get” defence. History says that even with last year’s financial promise to NATO, it remains a political argument about what it is prepared to pay for dominated by pressure to fund other areas of government, much more than it is about confronting the security threat to the United Kingdom and keeping us safe.

The tortured pathway to the DIP and its publication demonstrates that nothing has changed. Obfuscation and confusion reign. Last year, reluctantly, Keir Starmer made a commitment to NATO that the UK will spend 3.5% of GDP on core defence, plus 1.5% on national resilience infrastructure: 5% of GDP by 2035. NATO will hold an interim progress audit in 2029.

In 2025, the UK allocated 2.4% of GDP to defence spending; by re-allocating the budget for military intelligence, that percentage automatically rises to 2.6%; the DIP projects reaching 2.7% by the end of the decade and 3.0% “in the next parliament”. Assuming normal 5-year terms (not to be taken for granted with a change of PM imminent), the vague implication is 3.0% will be achieved in the period 2029-2034 but nothing more precise. DIP maintains 3.5% core defence spending will still be met by 2035; Starmer said the projections take defence spending to “4.2%” in 2035 which implies a significant shortfall against the 1.5% to be invested in national resilience.

The continuing obfuscation and elasticity is more than linguistic: it reflects and betrays a state of mind.

Black holes and mush

So to the detail of expenditure and the financing, such as they are. As ever with government initiatives and the documents which support them, nothing is ever straight forward. For all its detail, the DIP is no exception: we are outsiders and if there are errors distilling hard facts, it is because piecing them together is akin to completing a jigsaw without all the pieces while walking through a smokescreen of political spin (including ministers withholding information to avoid political embarrassment) and Treasury sleights of hand. With that caveat of E&OE I will try my best.

First, Rachel Reeves’s March 2026 Spending Review left what was calculated as a £28 billion shortfall in aggregate MoD spending out to 2029 against the identified minimum critical defence need. The Defence Chiefs and the Secretary of State argued vociferously that the gap must be plugged; it was exacerbated by a further £2 billion shortfall in the 2025/6 fiscal year due to unplanned operational spend in response to the Iranian crisis, needing to commit to Arctic Sentry to appease Donald Trump and prevent his appropriation of Greenland, and to have funds available to commit large numbers of troops and air cover to the putative Coalition of the Willing peace-keeping force which might have been deployed to Ukraine. Pitched as an extra £13.5 billion wrested from the Treasury, the “financial settlement” announced earlier in June by Keir Starmer was “final”. It prompted a stiff letter of complaint from the Chief of the Defence Staff and the resignations of SoS for Defence John Healey and Armed Forces Minister Al Carnes. On its eventual publication, Starmer’s DIP, an urgent document given the NATO Summit in Ankara on 7-8 July, forced £1.5 billion more of concessions from the Chancellor raising the £13.5 billion to £15 billion of “new” money. This still remains £13 billion short against the additional minimum defence need of £28 billion over and above the figures allowed in the Spending Review.

Moving seamlessly from one financial black hole to another. Of that £15 billion new settlement, it now seems that none of it is secure. How so? First, a separate and subsequent Treasury statement revealed that £4.7 billion remains completely unfunded. Second, despite new SoS for Defence Dan Jarvis announcing in parliament that “all government departments are required to contribute 1% of their capital budgets this year towards the DIP”, Starmer was later forced to concede that departmental horse trading to find the remaining £10.3 billion from other Whitehall departments has not even begun (the reality is that with a new PM pending, and a new Chancellor to be appointed, and a wholesale cabinet re-shuffle, none of those conversations is going to begin until the autumn and the Budget preparation, or, worse, being deferred until the March 2027 Spending Review).

The naked £4.7 billion is the political landmine laid by Starmer for his prime ministerial nemesis and usurper Andy Burnham: Burnham must find the money from somewhere (borrowings? taxes? yet more cross-departmental cost savings? which? Under the DIP the MoD itself is already required to make £10.7 billion of efficiency savings over the next four years). But essentially, the whole of the £15 billion is up for discussion (it is not surprising that p.78 of the DIP contains half a page of disclaimers relating to the entire defence budget: “The figures presented are indicative rather than precise estimates. They do not constitute binding commitments and are subject to the Government’s approvals processes, affordability considerations, and contracting procedures. Figures have been rounded and, therefore, may not sum”.)

It is not just about rounding errors. Much in the funding “plan” does not add up at all. Confusion reigns about precisely what the budget is in hard cash: Starmer and Jarvis both claimed publicly that the UK will spend “£298 billion” in the four fiscal years spanning April 2027-2030 inclusive. And yet in the DIP Annex Table 24, the “Summary Domains” (i.e. all the defence sub-buckets) add up only to £262 billion; where the remaining £36 billion has gone is a mystery---12% of the total aggregate defence budget is missing.

Leaving aside where the money is to come from, there is the argument over whether the £15 billion earmarked is actually extra money at all: as former Defence Secretary Sir Ben Wallace points out, it can easily be argued that all it does is to allow defence departmental spending to stand still in real terms when such elements as service pay rises (and their compounding effects on pension costs), and the frictional employment costs through Labour’s own tax and employment initiatives are taken into account. These are fully applicable to contractors and will be passed on.

Then there is the significant cost inflation being experienced with raw materials including Labour doubling the tariff to 50% on imported high-performance steel (including for defence) effective 1^st July. Finally, there are monies being allocated to existing projects which themselves are already way over budget and long overdue for delivery (e.g. £4.1 billion outstanding to complete the Type 26 frigates of which the first, HMS Glasgow, will have taken 11 years to build and deliver before commissioning late in 2028, five years behind schedule; the whole Type 26 programme will have slipped almost a decade).

Finally, the nine-year financial plan is heavily back-end loaded. At least two thirds of defence spending is deferred until the 2030s. The biggest hole in the programme out towards the commitment to spend 3.5% on core defence by 2035 is the admission that there are no pipeline projects allocated beyond April 2030. Chapter 1; Investing in the SDR’s Vision; Para 4 is explicit: “Unlike previous plans, between 2030 and 2035, we are leaving unallocated spending (editor’s italics) to allow us to respond to the evolving threat and seize new opportunities as technology advances”. While not tabulated, drawing from each section in the document £386 billion is identified as the aggregate spend across all defence domains in 2030-2035 excluding nuclear (which for some reason is not disclosed, despite £63.6 billion being publicly revealed in 2027-2030).

Arguably, as projects such as Type 83, the next-gen guided missile destroyer under development for the past four years as the Future Air Dominance System and now to be abandoned and replaced with cheaper, smaller crewless systems, this is a pragmatic strategy to prevent the accrual of significant development costs being uselessly written off with platforms or systems that are already obsolete or redundant. The counter-argument is that by 2030 we may have a new government with very different ideas about defence, or a second term of the existing one but pursuing a different course: applying the disclaimers, with £386 billion earmarked by domain but unallocated by project, it could be a tempting source of funds to plunder for other political priorities (in context, £386 billion is almost exactly the sum projected to be spent on welfare in the fiscal year 2029/30).

In justifying the defence settlement Keir Starmer maintains that “hard choices” had to be made. Unfortunately, the threat is not constrained by our financial wherewithal to meet it; it is defined by our adversaries’ determination to beat us; our defence posture should firstly deter them, and secondly ensure we win if they consider the odds in their favour to attack. Any shortfall in military capability or capacity undermines deterrence and adds to the threat crystallising as reality.

Blether about borrowings

Starmer and the current Chancellor refuse to countenance further borrowing to meet defence needs: “You have those arguing that we can just raise borrowing. Put it all on the never-never. And let’s be clear, defence bonds are just borrowing by another name”, said the Prime Minister. I flatter myself that my Defence Loan advocacy in recent analyses and in the national press seems to have reached the top and struck a raw nerve!

He is quite correct: of course defence bonds are borrowings, and they have an associated interest cost. He is also correct to say, “Strong public finances are a fundamental part of our strength in this world. Lose control of them and we’re not just poorer, we are much less secure.” What he fails to acknowledge is that his government has already lost control of those public finances. But then he is disingenuous to go on: “Slash funding to our public services in favour of defence - and we would be fundamentally weaker as a nation - more fractured as a society, less able to defend ourselves when our enemies prey on social division.” We all know that his authority with his backbenchers is zero (it is why he is being turfed out of office and usurped by Andy Burnham in a staged coup!) and the political reality is that they simply refuse to allow anything that jeopardizes rising welfare and health budgets, much the two biggest elements of government spending.

I have vociferously argued in favour of raising a fully hypothecated, fixed-term National Defence Loan with covenants tied to hard milestone deliveries. Far from the “never-never”, it would be limited to five years’ duration, the period the experts define as the peak risk. Given the parlous state of our armed services, in the past I have suggested £100 billion, the equivalent to roughly two years’ MoD budget allocation and similar to Germany’s emergency defence programme. It could be accommodated within the fiscal rules that allow borrowings to be used for capital projects. DIP identifies a total of £125 billion over four years to be invested in what is officially classified by the Treasury and the OBR as “CDEL” (Capital Departmental Expenditure Limit—the capex budget). Even if ships and aircraft were discounted as capital items against which to borrow (on the basis they run a high risk of being destroyed in combat), the DIP’s identification of £74 billion for “Defence Infrastructure and Estate” (i.e. land and buildings) investment alone could easily be met under the rules from borrowings.

In a case of reductio ad absurdum, to Starmer’s contention that UK mortgage rates must not be jeopardised by increased government debt caused by defence spending, the riposte is simple: look at Kiev or Tehran, Gaza, or Beirut; or think of London in 1940-41 in the Blitz and again in 1944-5 when the unstoppable V-2s were dropping from the stratosphere at supersonic speeds on the Capital. When the missiles are flying and the bombs are falling, and you don’t have the wherewithal to stop them, your mortgage rate will be the least of your worries: you’ll be much more preoccupied with finding a great big kitchen table under which to hide to save your skin as your house falls apart on top of you. You’ll be fuming at indolent politicians for failing to prevent a catastrophe.

Procurement Reform

Procurement has been a significant and enduring faultline running through defence programmes for decades. DIP is determined to address this as, more widely, is PM-in-waiting Andy Burnham with his public commitment to “rewire” the civil service. Decision making, specification, product manufacture and delivery times, inventory management, all are under the microscope.

Institutional inertia and risk aversion are powerful and ingrained throughout the entire procurement chain. Whether the new senior responsibility ‘organisational diamond’ comprising the Defence Secretary (policy & planning), Military Strategic HQ under the Chief of the Defence Staff (fighting & winning), National Armaments Director (procurement/national arsenal) and the Director Nuclear Enterprise (maintaining the UK’s nuclear deterrent), and the new Procurement Segmentation and Accelerating Commercial Pathways programmes are up to the task remains to be seen.

Lack of defined leadership has been a chronic handicap, as has the lack of empowerment to drive change; the ability to deflect blame and to avoid accountability has been endemic; success has not been rewarded nor has failure been punished. Lethality for which a ten-fold multiplier is foundational to the Army’s future success can only happen if the right quantities of the right kit turn up on time in the right place on demand and work unconditionally; shortfalls and deficiencies will have an inverse logarithmic effect on the Army’s survivability. Bluntly, soldiers will die, quickly; they and we need them to have the ability to survive and win.

As I have rehearsed on many occasions, UK procurement rapidly needs to develop the political courage of the Germans who changed the constitution to re-arm in scale; it needs the ingenuity and no-nonsense energy of the Ukrainians; the single-mindedness of the Poles to confront the risk; and the organisational efficiency of the Swedes who get things done fast with much greater bang-for-buck. Combine those with proper leadership and finally we might crack it.

“The essence of war is violence”

The famous von Clausewitz military axiom, to which WW1 Admiral-of-the-Fleet Lord (Jacky) Fisher added, “and moderation in war is imbecility”.  The Defence Investment Plan knowingly fails adequately to match the defence need against the quantifiable threat. It short-changes the armed forces. Judged by the Fisher yardstick, the government’s approach is therefore imbecilic. Our ability to rain violence depends on having enough of the right weapons; that firstly depends on effective and efficient procurement; it depends secondly on the military judgement of what is the best kit for the job.

The explosion of drone and missile-led warfare in Ukraine and the Gulf that has revolutionised warfighting since 2022 is a demonstration of how fast new methods and technologies can be developed. But for all the technological progressions, the reality is that warfare has regressed more than a century: on land the battlefield is now static, just as it became for most of WW1. It has been reduced to little more than a sophisticated stone-throwing competition which will endure until one side runs out of stones to throw or the means to throw them. As the Russians and Ukrainians know only too well, mobility has been entirely lost. Surely the challenge is to find the means to restore mobility and open up space such that an enemy can be chased out and the territory he controlled can be recaptured and held.

Playing Russian Roulette: a concise current audit of war

As things stand in mid-2026, the Royal Navy is out of the game. Reduced to a nominal 13 ships, its surface combat fleet (little more than a small flotilla) of destroyers and frigates is too small to meet its home and blue water operational requirements. It has a serviceability and manning crisis such that any one time at least a third are operationally unavailable. The Navy has no amphibious capability of any scale. Its two aircraft carriers are unreliable and prone to breaking down at the least convenient time. Not one single unit of our five nuclear-powered hunter-killer submarines is currently serviceable: their place in the order of battle is on paper only. Trident, the UK’s nuclear strategic deterrent, while ostensibly enormously powerful, has not had a successful live firing since 2012; the 2016 and 2024 test firings both failed. Currently assessed as almost rock bottom, no discernible improvement in either the Navy’s fighting capacity or its combat capability or resilience is likely before the end of the decade.

Despite the recognised importance of air power, the Royal Air Force is committed to shrinking its combat capacity. It has completed the retirement of 50 Typhoons, leaving a force of 107 Fourth Generation fast jet airframes of which a third habitually undergo maintenance on rotation at any one time. The retirees are not being replaced. Highly capable but scattered around eastern Europe, Cyprus, the Gulf and the Falklands, few Typhoons are left for UK air defence. Twelve new dual-capacity (i.e. conventional and nuclear armed) Fifth Generation F-35 Lightnings will be acquired but they are unlikely to arrive from America until the early 2030s. The UK currently has no comprehensive, fully integrated air defence system. From a combat perspective, the RAF has good capability, limited capacity and very low resilience.

After prolonged faffing in terms of direction and development and systems that over-promise and under-deliver (Ajax and Boxer being the two most notable), the Army’s new focus is on a 10-fold multiplier in lethality through autonomous systems and drones. Its current chronic problem is a supreme lack of ordnance with which to fight: almost all its missile and artillery stocks have been shot away in Ukraine and drones in scale are yet to arrive. It might have capability but its capacity and resilience are negligible. Under full battlefield conditions, until fully restocked, senior commanders see the duration of the British Army measured in days, not weeks or months, and certainly not years.

Admiral Fisher had another axiom: “Hit first! Hit hard! Keep hitting!”. It is neither NATO’s nor the UK’s business to hit first. On our own account we have limited ability to hit hard. We have zero capacity to keep hitting. Bluntly we face double jeopardy: a period of being simultaneously at the greatest risk while our resources and capability are at their lowest ever ebb.

Over the four fiscal years spanning 2027-2030 we are projected to spend £1.5 trillion on social security; the Defence Investment Plan allows £298 billion, one fifth, on physical security. As the UK slides rapidly down the defence league rankings in terms of expenditure and capacity (now also out of the top 30 in terms of military capability) we are not only “free-loading” on the back of the Americans but are now at risk of coat-tailing our European NATO partners to look after us.

Politicians such as Keir Starmer talk about “hard choices” and affordability. Defence is almost a conditional luxury. But consider the starting point as described above. Our armed forces are most often described as “hollowed out”; if the middle is hollow, the shell is perilously thin too and already shot through with holes. To be clear, since 1990 all governments have been culpable of misjudgement or wilful negligence; today’s parlous situation is not the fault of the current government (though it has already contributed to it as the forces have continued to shrink as a result of its own decisions). However, such is the starting point on its watch; the remedy is entirely its responsibility.

Announcing the DIP, Starmer oozed hubris; it was difficult not to notice a stony-faced Chief of the Defence Staff sitting in the front row, dressed in combats and looking distinctly unimpressed. He knows full well that what Starmer was hailing as a success at securing new money still leaves him at best 50% short of the minimum he needs, and the extra £1.5 billion doesn’t even touch the sides. If CDS was unimpressed, the Russians will have been quietly content; as a public document, just like me they googled and digested a copy of our defence investment plans as soon as they were published; they will not be immediately alarmed.

The Defence Investment Plan is a start. It exudes positivity and is couched in optimism. But it makes no acknowledgement of just how serious our defence plight is. It has taken two years to get this far and progress remains leisurely. Defence needs many more resources; it needs much greater urgency; and it needs political leadership.

Mr Burnham, you need to grasp the nettle: keep us safe. Unconditionally.