Defence Secretary Dan Jarvis hailed a 27% real-terms increase in spending to the House of Commons on Tuesday as he spelt out the contents of the long-awaited Defence Investment Plan (DIP).
Jarvis, a former paratrooper, secured an additional £1.5bn to the £13.5bn offered to his predecessor. Former Defence Secretary John Healey, who resigned on 11 June, accused the Prime Minister of being “unable” and the Treasury of being “unwilling” to allocate sufficient resources “to defend the country at this time of rising threats.” Previously a loyalist of Sir Keir Starmer, Healey had been at loggerheads with the Treasury since April over a £28bn shortfall in defence spending. The gap in funding was the result of the Independent Spending Review’s (SDR) emphasis on both advanced and nuclear capabilities alongside replenishing and replacing munitions and kit.
Jarvis and his counterparts in the Treasury have faced the unenviable task of refashioning the heavily tarnished investment plan that triggered Healey’s resignation to a standard that will reassure the UK’s allies ahead of the NATO summit in Ankara next week. Some details will arrive at a later stage. For instance, £4.7bn of funding will be allocated in the next Budget. Defence Select Committee Chair Tan Dhesi MP observed that this DIP contains “significantly less detail than usual”. Jarvis told colleagues in the Commons that reaching the new 2035 NATO target of 3.5% of GDP funding was “an absolutely critical commitment”.
We now await Burnham’s arrival in Downing Street. In the nearest thing we have yet seen to a manifesto from the former Mayor of Greater Manchester, Burnham vowed on Monday to “rewire Britain” by supercharging devolution and rebalancing enterprise towards delivering social value. The broad direction of his vision is clearer than many might have expected. It is therefore worth examining the DIP through this lens as we prepare for Burnham’s arrival.
Breaking down the DIP
- £5bn for drones and autonomous systems.
- Continued investment in the Dreadnought nuclear deterrent.
- GCAP, the UK’s sixth-generation fighter programme with Italy and Japan.
- A “Hybrid Navy” combining crewed and autonomous platforms.
- Greater investment in digital warfare, AI and space-based capabilities.
- Increased spending with SMEs, alongside a “buy British by default” approach.
Scaled back or removed
- The Type 83 destroyer programme has been scrapped in favour of drones.
- Questions remain over future air and missile defence capabilities.
- The 40,000-cadet target has been dropped.
- Refurbishment of military accommodation is being delayed.
The Plan points towards a more technologically advanced force built around autonomy, digital integration and nuclear deterrence, the latter accounting for just over a fifth of the entire DIP. The biggest sacrifice is the scrapping of Type 83 destroyers, which have the capability to shoot down hypersonic missiles. This is no small trade-off in the eyes of former Army officer and Liberal Democrat MP Mike Martin, who tweeted: “Considering that the UK doesn’t currently have any air defences worth speaking of, this looks like a terrible choice.”
Domestic procurement
“For too long, UK public procurement policy has been based on chasing cut-price deals around the world rather than helping our own British-based suppliers,” Burnham declared on Monday. The DIP reflects that shift already, placing greater emphasis on British supply chains, domestic manufacturing capacity and increased spending with SMEs. This begs the question: how does a department with a patchy record on public spending prioritise domestic suppliers while keeping costs low?
“No margin for error,” said the Royal United Services Institute’s Matthew Savill in his rapid response to the DIP. “The overall settlement is relatively modest when set over four years against the enormous shopping list of investments needed to rebuild the Armed Forces, especially readiness.” In other words, applying military discipline to the MoD’s allocation of resources is central. The DIP’s promised £10.7bn in efficiency savings will also come under tremendous scrutiny.
A decade ago, plans to expand the UK’s fleet of Protector drones experienced repeated delays and substantial cost increases before entering service. The new £5bn commitment to autonomous systems carries with it innate risks. Betting on emerging drone technology is sound, given what the Ukraine war has taught us, but it also takes the MoD into uncharted territory.
Then there is the question of what constitutes domestic supply. Defence is an inherently expensive business, often requiring international partnerships to develop the next generation of kit. The Global Combat Air Programme (GCAP), a collaboration between the UK, Italy and Japan, will receive £8.6bn under the Plan alone. Italian aerospace company Leonardo has a helicopter plant in Yeovil. US contractor Lockheed Martin has established a space skills and technology centre in the North East. At what point does foreign investment become domestic capacity in Burnham’s visions? Lest we forget, attracting FDI has been an important part of his economic strategy as Manchester Mayor.
Defending the north, social value
Burnham also argued that public procurement should generate greater social value. It just so happens that the defence industry is well suited to supporting skills acquisition, while also propping up communities that have experienced decades of industrial decline, particularly in Burnham’s homeland, the North.
Barrow-in-Furness offers perhaps the clearest indication of what this could mean in practice. The DIP commits £64bn to Dreadnought-class submarines under AUKUS and the wider defence nuclear enterprise. In November, The Economist documented BAE Systems’ local footprint. The UK’s only major defence company employs more than 14,000 people in Barrow. Its order book is effectively full for decades into the future. Yet it also notes that parts of the town remain among the most deprived in England. Will Burnham’s procurement requirements extend further in this direction?
The DIP explicitly frames defence as an “engine for growth”. Jarvis told MPs that its benefits would be felt “right across the United Kingdom”, helping to generate growth and “reindustrialise our economy”. Similar stories can be found in Derby, where Rolls-Royce’s submarine reactor programme supports thousands of highly skilled jobs. The government estimates the Plan will support nearly 60,000 additional skilled jobs by the end of the decade.
NATO summit and beyond
For all the clues the DIP provides about how a Burnham premiership might approach defence, procurement and industrial strategy, many of the biggest questions remain unanswered. The most immediate is how the Plan will ultimately be funded. Burnham has committed to honouring the UK’s defence spending ambitions, including the £4.7bn spending gap. There will be “no compromise on the security of the nation,” he told LBC this week. Meanwhile, some of the committed funding has been redirected from growth and job-creating infrastructure budgets.
On 6 July, NATO leaders and military officials will meet in Ankara amid continued warnings about the threat posed by Russia despite recent Ukrainian successes on the battlefield. We can expect US President Donald Trump to encourage European allies to rearm with even greater urgency. Whether Trump and European leaders are convinced by the UK’s trajectory towards 3.5% of GDP defence spending, and whether future geopolitical shocks force a further reassessment of priorities, remains to be seen. What is clear is that despite the symmetry between the incoming Andy Burnham’s vision and the defence plan he’s inherited, this is just the starting point.
For organisations operating in the defence sector, the political implications extend beyond individual programmes. Burnham’s remarks over the coming weeks will warrant close attention, particularly any indication that he favours a broader interpretation of capital spending that could unlock additional borrowing for defence investment. Companies should also examine their social value propositions. If the new Prime Minister seeks to steer enterprise towards social value, skills, apprenticeships and support for local communities may become increasingly important considerations in both procurement and, therefore, political engagement. Several MPs, such as Alex Baker in Aldershot and Michelle Scrogham in Barrow, are vocal champions of defence and the armed forces, and are likely to play an important role in shaping the debate around the sector’s contribution to local economies as well as national resilience.
