Budget Leaves Serious Holes in UK Defence and National Security Plans, Henry Jackson Society Warns

 The Henry Jackson Society has warned that the Government's Budget leaves major unresolved risks to Britain's defence and national security, despite headline commitments to increased defence spending. 

While the Budget recommits to raising defence spending to 3% of GDP by 2035, analysis from the Office for Budget Responsibility (OBR) shows that the Government's wider ambition to reach 3.5% of GDP by 2035 would require an extra £32 billion in today's money, with no funding identified. 

The OBR also notes that “Single Use Military Equipment” (SUME) - including missiles, complex weapons systems and warships - has been reclassified from day-to-day resource spending into capital spending, meaning these items are now subject to depreciation rules. This accounting change does not provide new capability or extra defence funding, but it does mask pressures on the MoD's real resource budget at a time of rising global risk. 

At the same time, the Budget maintains ringfenced spending for the NHS, schools, defence and ODA. According to the OBR, this forces “unprotected” departments - such as the Home Office, policing, border security and other security agencies - to absorb real-terms cuts averaging 3.3% a year at the end of the forecast period – threatening the UK's broader security architecture. 

Inflation, now higher than when spending envelopes were set, is further eroding real budgets across the national security system. The OBR notes that the rise in prices has already reduced real departmental spending growth and threatens the purchasing power of defence programmes. 

The Budget also provides no resolution to several critical unfunded pressures identified by the OBR, including: 

• a £1.4 billion shortfall in the Home Office asylum budget as small-boat arrivals rise 

• a looming £14 billion deficit accumulated by local authorities (SEND-related), which risks destabilising policing, community safety and resilience planning 

• ongoing delays and underspends in departmental capital budgets, threatening defence modernisation timelines 

The OBR's risk analysis also highlights that global financial shocks, such as a potential correction in equity markets or higher interest rates, could sharply reduce future fiscal space, limiting the Government's ability to sustain long-term defence plans announced in the Budget. 

Commenting, Dr Alan Mendoza, Executive Director of The Henry Jackson Society, said: 

“This Budget talks up defence investment, but the numbers simply don't match the rhetoric. The Government sets ambitious targets, yet the OBR shows a £32 billion black hole under its 3.5% defence pledge. Without a funding plan, that isn't a strategy - it's a slogan. 

“Worse still, while defence is protected, the rest of the national security system is being cut in real terms. The Home Office, counter-terror policing, border security and parts of our intelligence architecture all face reductions of more than 3% a year. You can't defend Britain while hollowing out the agencies that keep extremists and organised criminals off our streets. 

“The OBR also makes clear that inflation is eroding real budgets, key programmes are at risk of delay, and major pressures - from rising asylum costs to a £14 billion local-authority deficit - remain unaddressed. These are direct hits to the UK's security, and the Budget simply doesn't confront them.” 

Andrew Fox, Former Parachute Major and Associate Research Fellow, Henry Jackson Society, said: 

“This Budget talks tough on defence but doesn't pay for it. The OBR shows a £32bn black hole under the Government's own defence targets, while the rest of the national security system faces real-terms cuts. You can't keep Britain safe by funding ambitions on paper and cutting the agencies that protect us in practice. 

“Recent warnings from senior MoD figures that the UK must prepare for the possibility of direct conflict with Russia within the next five years further underline the gap between the Government's rhetoric and its resourcing.  The Budget does not provide the funding needed to accelerate readiness, rebuild stockpiles or strengthen NATO-facing force posture at the pace the strategic environment demands.” 

ENDS 

Notes to Editors 

1. £32bn defence funding gap for 3.5% of GDP target. The OBR states that the Government's commitment to reach 3.5% of GDP on defence by 2035 would cost “around an additional £32 billion in today's money.” 
Source: OBR, Economic and Fiscal Outlook, Page 177/203  

2. Planned path to 3% of GDP. Ministry of Defence spending rises from 2.0% in 2025–26 to 2.7% by 2030–31, on a linear path to 3% by 2035. Source: (para 5.22–5.23)  

3. Real-terms cuts of 3.3% a year for “unprotected” departments. The OBR concludes that once the NHS, schools, defence and ODA are protected, all other “unprotected” RDEL will “fall by 3.3 per cent a year in real terms in the final two years of the forecast.” Source: (para 5.23)  

4. Reclassification of Single Use Military Equipment (SUME). SUME - such as missiles, complex weapons, and warships - is now treated as capital spending rather than day-to-day resource spending, meaning it is subject to depreciation. This change does not increase defence capability or provide extra cash; it is an accounting reclassification. Source: Defence DEL classifications discussed across the Public Sector Expenditure chapter (pp. 116–133/203). (The SUME point is distributed across several tables and notes in the DEL classification section.) 

5. Inflation reducing real defence and security budgets. The OBR notes that inflation is higher than assumed at the Spending Review, reducing real departmental spending growth across all budgets. Source: (para 7.21) 

6. Vulnerability of defence procurement to capital underspends. The OBR highlights evidence of large historic underspends in capital budgets, especially in years where investment increases sharply - creating risk for major procurement programmes. Source: (para 5.21) and (para 5.22)  

7. Asylum system pressures. Due to rising small-boat arrivals and increased accommodation demand, if asylum spending stays at 2024–25 levels, the Home Office will face a £1.4bn budget pressure by 2028–29. Source: (para 5.19, bulleted pressures)  

8. Local authorities face a £14bn SEND deficit. Accumulated Dedicated Schools Grant (DSG) deficits linked to SEND provision will reach £14bn by 2028–29, with no Government plan for resolving the fiscal risk. Source: Page 133/203 and 128/203 (Chart A; discussion of DSG deficits) 9. Rising asylum accommodation costs over the next decade. Demand for asylum accommodation is expected to cost £15.3bn over 10 years, up from the previous estimate of £4.5bn. 
Source: Page  (para 5.30) 

https://obr.uk/efo/economic-and-fiscal-outlook-november-2025/