Defence Secretary Wes Streeting has firmly denied allegations that the government is postponing critical decisions regarding defence expenditure. The administration faces scrutiny for failing to outline a specific pathway in Wednesday's Budget to achieve its target of spending 3% of GDP on defence by 2030. This omission has placed Streeting at odds with members of the Commons defence committee, who argue that key decisions have been deferred until next year's spending review.
Amidst this debate, Chancellor John Healey and Streeting announced a new "offset strategy" aimed at boosting British industry. Under these rules, foreign companies awarded defence contracts exceeding £50m will be required to invest an equivalent value back into the UK. This reinvestment must focus on British factories, job creation, and training programs. The Ministry of Defence intends to apply these regulations on a case-by-case basis starting in April 2027. Healey and Streeting are scheduled to unveil the policy during a visit to BAE Systems' shipbuilding site in Glasgow.
The government noted that nations such as Poland, Norway, and the Netherlands have already implemented similar mandates to maximize economic benefits from defence procurement. While ministers hope these rules will stimulate investment in Britain's defence sector, critics suggest the approach is designed to be politically palatable without committing to immediate spending cuts or a detailed roadmap.
Tan Dhesi, Labour chair of the cross-party Commons defence committee, criticized the lack of a precise plan in the Budget, warning that delaying capability building leaves the UK vulnerable in the event of major conflict. Although Dhesi praised the government for filling a £4.7bn gap in the Defence Investment Plan by cutting capital budgets across other departments by 1%, he maintained that the committee stands by its criticism regarding the delayed timeline.
Streeting responded to these comments as "unfair" and "unfounded," stating on Thursday that he respects Dhesi but strongly disagrees with his assessment. He argued that the accusation of delaying does not hold up against the additional funding already allocated to defence capabilities. Speaking on BBC Breakfast, Streeting explained that waiting for the spending review, which could occur in the second half of 2027, allows ministers to consider overall spending holistically. He acknowledged that the Armed Forces were under-invested for over a decade and admitted the UK is not yet where it wants to be regarding readiness.
Defence analysts have questioned the government's ability to meet its 2030 target and the wider NATO goal of 3.5% by 2035, noting that current spending stands at an estimated 2.6% of GDP. Some estimates suggest an additional £10bn in annual spending is required to reach these goals. Conservative leader Kemi Badenoch accused Healey of failing his own test by not presenting a plan for the 3% target, while shadow defence secretary James Cartlidge criticized the proposal to establish a Multilateral Defence Mechanism with Finland, Poland, and the Netherlands as an attempt to borrow more money amidst national debt exceeding £3 trillion.
Sources: BBC News UK.