Defence denied funding boost in Budget

Treasury puts tight public finances ahead of new spending in forthcoming package of measures

THE Ministry of Defence (MOD) will not get extra funding in the Budget next week, The Telegraph understands, despite military figures warning about the state of the Armed Forces.

Treasury figures will argue when pressed that tight public finances have limited the ability to announce new spending in the package of measures, to be unveiled next Wednesday.

The news blindsided some figures in the MOD when approached by The Telegraph yesterday. Grant Shapps, the Defence Secretary, had said he was seeking more money.

Former defence secretaries expressed surprise that, as countries across the world raise defence spending

‘The priority for this Budget is rewarding work and growing the economy’ ‘I am not sure that this is the Army the nation needs, or that policymakers want’

as geopolitical tensions increase, no extra money will be announced.

But a Treasury insider pointed to the MOD funding rise last spring, when an extra £5billion was given over two years with another £2billion-a-year extra for much of the rest of the decade.

Sir Gavin Williamson, the former Tory defence secretary, said: “What is becoming increasingly clear is that the threats that we face need and require Britain and its allies to step up what it does in terms of building both capability and mass within our Armed Forces.

“That is going to require additional money to grow the size of our Army, Navy and Air Force.

“Without doing that, we will be illequipped to face the challenges that our enemies are increasingly presenting us with.”

A second former Tory defence secretary said “we need to keep new money flowing in”, adding of extra funding: “It isn’t discretionary, it is a must.”

This week, Jeremy Hunt, the Chancellor, and Rishi Sunak, the Prime Minister, will continue to debate the package of measures to be announced in the Budget on March 6.

It could be the final Budget before the next general election, with Treasury insiders not expecting a final decision on whether to do another fiscal event this autumn until summer.

Government figures close to discussions have indicated that the Treasury has less money than hoped to play with, given economic forecasts on reductions to government debt.

It means that instead of announcing increases in public spending, Mr Hunt is considering reducing the amount spending will rise by in the years after the election.

The Chancellor is looking at changing his assumption that spending on public services will rise at 1 per cent a year above inflation after the election to 0.75 per cent a year.

That would amount to unprotected government departments having to reduce their budget by a fifth by the end of the decade, something think tanks have likened to “austerity 2.0”. The decision to focus on tax cuts, which the Treasury believes are needed to boost economic growth and help Tory re-election fortunes, rather than extra spending helps explain the MOD decision.

A Treasury insider said: “The priority for this Budget is rewarding work and growing the economy and that means bringing forward growth-enhancing measures today. But any tax changes won’t be on the same scale as the Autumn Statement last year.”

Spending on each government department has already been detailed for this year and next year in a wider spending review done years ago by the Tory government.

Last spring, extra money was announced for the MOD on top of that, with £4.95billion promised for this year and next.

A further £2billion every year for the most of this decade was also announced to “improve the resilience and readiness of our conventional and nuclear forces”, as the Treasury has previously put it. But since then inflation has reduced more slowly than hoped, having a knock-on impact on the overall MOD budget.

The Telegraph revealed last week how the department had ordered an effective two-month ban on capital spending until the new financial year given the tight funding situation.

This weekend this newspaper also reported that Gen Sir Patrick Sanders, the Chief of the General Staff, suggested that under-funding has left it in danger of becoming a “domestically focused land force”.

Gen Sir Patrick wrote in a letter to former generals: “Our strategic resilience is at risk, and we might inadvertently reduce ourselves to a smaller, static and domestically focused land force. I am not sure that this is either the Army the nation needs, or the one that policymakers want.”

The Treasury does not comment on reports about possible Budget measures.