PM faces Cabinet battle over defence spending

Johnson to set funding above 2pc Nato threshold but resists Wallace’s call for increase in military budget

BORIS JOHNSON is resisting public pressure from his Defence Secretary and the head of the Army to increase military spending, amid a heated Cabinet split over future funding.

The Prime Minister will today say that the UK is spending 2.3 per cent of GDP on defence as he arrives at a Nato summit to agree an international push into Eastern Europe to ward off the threat from Russia.

At the gathering in Madrid, Mr Johnson will call on other member nations to “dig deep” and increase spending targets beyond the current level of 2 per cent of GDP.

But his rallying call threatens to be undermined by opposition from two senior Cabinet ministers over his refusal to increase Britain’s own budget, and concern he is planning to breach a manifesto commitment to link military spending to inflation.

The Daily Telegraph can reveal that Downing Street intervened to water down calls for higher defence expenditure from Ben Wallace in a speech delivered yesterday.

Mr Wallace, the Defence Secretary, had been due to argue that spending just 2 per cent of GDP on defence was outdated, but the line was removed at No10’s request.

Downing Street was said to have been left “furious” by what was seen as attempts to bounce Mr Johnson to announce a major defence spending increase while at a Nato summit.

The Treasury had not approved any rise in spending. Both Mr Johnson and Rishi Sunak, the Chancellor, have argued in recent weeks for the need for spending restraint as inflation surges.

By contrast Olaf Scholz, the German chancellor, yesterday pledged to become Europe’s largest defence spender as he pledged to increase Germany’s annual budget to up to €80 billion (£69 billion).

The Prime Minister will tell the alliance today: “The Nato Alliance keeps our people safe every day. But over the next 10 years the threats around us are only going to grow.

“We need allies – all allies – to dig deep to restore deterrence and ensure defence in the decade ahead. The 2 per cent was always meant to be a floor, not a ceiling and allies must continue to step up in this time of crisis.”

The Prime Minister yesterday knocked back calls for a defence spending boost in the UK, arguing that the current level of 2.3 per cent of GDP, including spending on Ukraine, was one of the highest in the West.

However, analysis by the Institute for Fiscal Studies think tank also reveals that the Ministry of Defence budget will actually fall from 2023 in real terms owing to inflation. The 2.3 per cent also includes £1.3billion of support for Ukraine, including donated military equipment.

Mr Wallace received public support yesterday from Liz Truss, the Foreign Secretary, who backed calls for more defence spending during a parliamentary committee appearance.

Ms Truss said: “I do agree with the Defence Secretary’s concerns. We have a real issue in terms of the availability of defence equipment given the hugely increased security threat in Europe and we need to increase our industrial capacity. I’ve said before that the free world did not spend enough on defence post the Cold War and we are now paying the consequences.”

Gen Sir Patrick Sanders, the professional head of the British Army, said cuts were “perverse” and the UK must be “unequivocally prepared to fight” if Russia invades Nato territory.

“It would be perverse if the CGS (Chief of General Staff ) were advocating reducing the size of the Army as a land

war rages in Europe and Putin’s territorial ambitions extend into the rest of the decade and beyond Ukraine,” he said.

Jeremy Hunt, who is widely expected to run against Mr Johnson in any Tory leadership contest, has said spending should hit 4 per cent of GDP.

Mr Johnson yesterday denied that the Conservative 2019 election manifesto promise that the defence budget would increase by 0.5 per cent above inflation every year would be broken.

But Government figures have privately conceded it is expected not to be hit and it remains unclear how the promise can be delivered given current spending levels and the 11 per cent inflation rate expected this year.

Despite an initial draft of his speech being slapped down by No10, Mr Wallace used the address at the Royal United Services Institute to make the case for increased defence spending.

“For too long defence has lived on a diet of smoke and mirrors, hollowedout formations and fantasy savings when in the last few years threats from states have started to increase.

“Right now Russia is the most direct and pressing threat to Europe, to our allies and these shores. It is time to mobilise, be ready and be relevant.”

However The Telegraph can disclose that more explicit criticism to the current Nato and UK commitment to spend 2 per cent of GDP on defence was also included. The original draft of the speech was understood to have included a line about how the 2 per cent promise had been struck in 2014 and that for the next decade it was time to “dig deep”.

The line was removed after Downing Street intervened on yesterday morning, given it had implications on spending. The intervention followed reports that Mr Wallace wanted £10billion a year in extra military spending.

Pressed by journalists in a briefing yesterday, the Prime Minister declined to promise any new increases to defence spending, instead pointing to past and current commitments.

Meanwhile, Ben Zaranko, at the Institute for Fiscal Studies, said the latest inflation forecasts suggest defence spending will increase by just 0.9 per cent in real terms this year – once rising prices are taken into account – far less generous than the 2.2 per cent boost initially expected.

He says the MOD budget will then fall in real terms by 2.6 per cent in 2023-24 as inflation squeezes spending and a further 0.6 per cent the following year.

‘For too long defence has lived on a diet of smoke and mirrors, hollowed-out formations’