Conservatives announce plans for £50 billion Sovereign Defence Fund

Today [Thursday 18th December] the Conservatives are announcing their plans to boost Britain's defence through a Sovereign Defence Fund (SDF) of up to £50 billion, by re-allocating public funding currently spent on costly environmental projects.

As the world becomes increasingly more volatile and dangerous, it is clear that the UK must go further to protect our interests but Labour has failed to provide the investment our armed forces need – including failing to provide any new investment at the last Budget.  

That is why the next Conservative Government would use our Sovereign Defence Fund to accelerate war readiness and send a powerful message to our adversaries.  

This investment would enable the procurement of drones and new technologies at a far greater pace and scale – transforming the lethality of the British Armed Forces. 

To enable this ramp up in domestic drone production, the Sovereign Defence Fund would mobilise billions in public and private funding to overhaul the defence industrial base, including: 

• Taking stakes in UK defence start-ups,  
• Investing in dual-use companies, and  
• Building resilient supply chains – reducing our reliance on hostile states like China.  

This Sovereign Defence Fund is a fully funded plan based on repurposing existing Government expenditure to invest in this national priority. It is comprised of three elements: 

• £6 billion (£2 billion per anum over the course of this parliament) would be reallocated from the Research and Development (R&D) budget in the Department of Science, Innovation and Technology to the MOD. It is well known that defence technology and innovation can have spillover effects into other sectors, like communications and transport, causing a multiplier effect. 
• £11 billion ringfenced from the National Wealth Fund (NWF) – which will become the National Defence and Resilience Bank (NDRB). This funding is currently allocated to many of Ed Miliband's costly eco-projects. We would leave the remainder of financing in the fund for national resilience like water and transport. 
• Approximately £33 billion of private finance via NDRB mobilisation. The existing NWF target of mobilising £3 of private investment for every £1 of public investment would remain for the SDF – so this could unlock tens of billions of pounds in private investment. 

The Conservatives would deliver these changes through primary legislation.  

Countries like Germany are allocating huge funds for Defence – all Labour have done is give up our fishing rights to access the EU Defence fund (‘SAFE') – without getting a penny in return. The Labour Government is failing to face up to the serious challenges this country faces.  

Despite announcing an increase in defence spending the Government has still refused to commit to raising it to 3% by the end of the parliament – instead kicking it into the next decade. This comes despite a rising NATO expenditure target, and allies like Poland investing heavily whilst we fall behind.  

Labour also axed £500 million of defence projects without any clear plan to replace them, leaving our Armed Fores without the equipment or capabilities they need to defend our country. 

This failure from the Government has led to warnings from senior figures across the sector.  

The Defence Select Committee stated that Labour are moving at a “glacial pace” on war readiness, and General Sir Gwyn Jenkins, First Sea Lord, called for an urgent increase in defence spending as we risk losing naval control to Russia.  

Kemi Badenoch MP, Leader of the Conservative Party, said: 

“The next Conservative Government will move funding from Ed Miliband's vanity Net Zero projects and use it to back our military to accelerate their war readiness.

“We must ensure our Armed Forces are equipped and ready to defend our country. Because defence of the realm must be the first priority of any Government.  

“In the face of growing threats we should be investing more in defence, yet all we see from this Labour Government is heel dragging and vague promises."

James Cartlidge MP, Shadow Defence Secretary, said: 

“When we say we back our armed forces – we mean it.  

“With a value of up to £50 billion, our Sovereign Defence Fund will accelerate the UK's war readiness.   

“The SDF would deliver the drone revolution our armed forces require; galvanise private finance into Defence at an unprecedented scale; and transform the resilience of our Defence industrial base – removing Chinese dependencies and protecting critical supply chains.  

“Ultimately, the SDF would deliver a more lethal UK armed forces, whilst supporting innovation and economic growth – making Britain safer and more prosperous.” 

Sir Mel Stride MP, Shadow Chancellor, said:

“As threats increase around the world, it is vital that we invest in our defence capabilities.

“Galvanising private sector investment in our defence sector and new technology can bring huge benefits to our economy as well as to our national security.

“Labour are prioritising net zero projects instead of our national defence. The Conservatives would channel investment into our long-term security and seize the growing export opportunities for UK industries.”

ENDS 

Notes to Editors 

• The Labour Government heeded Conservative calls to repurpose funding from the aid budget to defence.Conservatives called for Labour to repurpose funding from the official development assistance budget for the defence budget, and Labour followed our advice. Conservatives are calling on Labour to now go further and commit to 3 per cent of GDP on defence by the end of this decade – not by raising taxes or by borrowing more, but through restraint across other areas of spending (Hansard, 25 February 2025, Vol.762, Col.635, link).  

• Conservatives are calling for the Government to go further and spend 3 per cent of GDP on defence by the end of the decade.Labour doesn't have a plan to hit 3 per cent of GDP on defence and has delayed any hope of reaching that level into the next decade. It took months of sustained pressure from Conservatives for Labour to even commit to a deadline for 2.5 per cent (BBC One Sunday with Laura Kuenssberg, 1 June 2025, archived). 

• Labour's Chagos Surrender Agreement will cost £35 billion over the next 99 years and leave our country weaker and poorer. Conservatives would scrap the Chagos Surrender Bill. Labour did not have to makeirresponsible deal, which will mean we have less money to spend on ramping up our defence capabilities in a dangerous world, which we need to do to keep Britain safe. And it is yet another burden on British taxpayers who are suffering under Labour's punitive tax hikes and the Winter Fuel Payment cut (The Daily Telegraph, 10 August 2025, link). 

• Labour's Strategic Defence Review is unravelling because it doesn't have a plan to hit 3 per cent of GDP on defence and delayed any hope of reaching that level into the next decade. STUDIO: ‘Do you have a specific guarantee of that from the Chancellor, from the Treasury?' HEALEY: ‘Well, I look at the way the world's changing. I look the way that the Chancellor is fixing the economic foundations of the country. I see increasing growth. I see the Office of Budget Responsibility rising its forecast for growth in this country. You know, I have no doubt that we'll hit that ambition of meeting 3 per cent' (BBC One Sunday with Laura Kuenssberg, 1 June 2025, archived).

• Since the election, Labour have dithered and delayed over the decision to increase defence spending whilst the world got more dangerous. On 25 February 2025, seven months after Keir Starmer scrapped the previous Conservative Government's fully funded increase to defence spending, Labour announced defence spending would reach 2.5 per cent of GDP by 2027. They cannot guarantee spending of 3 per cent. (PMO, Press Release, 25 February 2025, link).

• The National Wealth Fund has been capitalised with £27.8 billion. Clean energy projects are by far the majority area of spending in the current programme (National Wealth Annual Report and accounts 2024-5, October 2025, link).