Bee Boileau, a Research
Economist at IFS, said:
“The government announced today that
it will commit to spending 5% of national income on national
security in 2035. This will be split between 3.5% of national
income on ‘core' defence spending and 1.5% of national income on
‘resilience and security' spending.
We currently spend around 2.4% of
national income on ‘core' defence. Plans set out at the Spring
Statement and confirmed two weeks ago at the Spending Review are
for defence spending to increase to 2.5% of national income (or
2.6% including intelligence and security services) from 2027-28
onwards, and then remain at this point until the end of the
parliament. Increasing ‘core defence' spending from 2.6% to 3.5%
of national income would mean, in today's terms, spending around
an additional £30 billion a
year.
The government announcement implies
that the 1.5% of national income for ‘resilience and security'
spending will be reached in 2027-28, suggesting this is already
covered by the departmental budgets that were set at the Spending
Review. This is therefore a decision about how spending will be
classified – and, perhaps, how individual departments' budgets
will be allocated – rather than an announcement of any additional
money on top of existing
budgets.
Today's commitment concerns the level
of defence spending in 10 years' time. This means it does not
necessarily affect the spending plans set out at the Spending
Review earlier this month, which covered only this parliament. It
therefore may not directly affect decisions at the Autumn Budget.
But the current plan to hold defence spending flat at 2.6% of
national income between 2027-28 and 2029-30 looks notable in the
context of this new commitment. It might be more sensible to ramp
up defence spending gradually over the 10-year period: we might
therefore see existing plans revised up at the next Spending
Review expected in 2027.
Zooming out, spending 3.5% of national
income on defence is certainly not unprecedented. We last spent
3.5% of national income on defence at the end of the 1980s, and
in previous decades we spent a much larger share of national
income on defence. But in the past the government was also
spending much less on health. We are now likely to see health and
defence spending rising as a share of national income for a
sustained period of time, which will put considerable additional
pressure on the public finances and the size of the state in the
coming years.”
