Treasury officials reject cross-party calls for increased defence spending
Tories’ election flop means manifesto pledge to boost Armed Forces budget is no longer regarded as binding
AN INFLATION-BUSTING rise in military spending is being blocked by Treasury officials in the wake of Theresa May’s disastrous election campaign, Whitehall sources have said.
Officials are rejecting MoD calls to raise funding above 2 per cent of GDP, with some arguing the election failure means the Conservatives are no longer bound by a manifesto pledge to grow military spending above inflation.
The row comes as the Armed Forces are preparing more cuts to meet Treasury efficiency targets of £20bn savings in the next decade, to fund new ships, submarines, aircraft and vehicles.
A Westminster debate last week heard cross-party calls for increased defence spending, while a former head of the Army earlier this month called for the UK’s military budget to hit 2.5 per cent of GDP in the face of growing threats to the country.
The Tory manifesto vowed to meet Britain’s Nato commitment to spend at least 2 per cent of GDP on the Armed Forces and to increase the budget by 0.5 per cent above inflation each year.
Sir Michael Fallon used the Tory conference to call for more money, saying the 2 per cent was “a minimum commitment, so we should aim now to do better than that. The threats to our country are intensifying.”
Yet worsening economic forecasts are understood to have left the Treasury with little extra spending money ahead of November’s autumn budget.
One senior Whitehall source said: “Things are going to be very tight. Economic forecasts are being lowered and that leaves the Treasury in a very difficult situation. Some people are saying the manifesto pledge to grow defence spending is not binding because the Conservatives didn’t win the election.”
Service chiefs are already braced for a string of further cuts. The forces are being asked to “live within their means” and come up with hundreds of millions of pounds of savings this year in order to unlock Treasury money.
The Government is also having to look again at its 2015 strategic defence and security review, as the soaring cost of equipment, particularly nuclear submarines, coupled with the fall in the pound, has blown a hole in plans. Defence and security priorities are also being redrawn because of the growing threat from Islamist terrorists and the wave of attacks on UK soil this year.
Chiefs have warned the constraints will see them cut forces already reduced by decades of declining spending. The Navy has warned it may have to cut 1,000 Royal Marines, as well as amphibious assault ships and several minesweepers, so it can keep new car- riers and safeguard Trident. The Army has drawn up proposals to slash large parts of the Army Air Corps.
MoD officials said that there was still too much bureaucracy and duplication in the three forces that could be cut without affecting front-line forces. One source said: “The Army has got one clerk for every 17 soldiers, for example. There’s no need for that these days.”
Lord Dannatt, former chief of the general staff, said earlier this month that he wanted to see money transferred from the ring-fenced aid budget to bolster military spending.
He said: “I would like to see it rise to two-and-a-quarter, to two-and-a-half per cent. That’s an extra three to five billion pounds. That would go quite a long way.
“If we can’t afford, in the spirit of the ninth or tenth year of austerity, to spend more than 2 per cent GDP on defence, I think I would question whether we can afford to spend 0.7 per cent of GDP on our international aid project.”
MPs from both sides of the House called for a rise in defence spending during a debate on Thursday called by Marcus Fysh, the Tory MP for Yeovil.
A government spokesman said: “We are committed to spending 2 per cent of our GDP on defence and increasing the MoD’s budget by at least 0.5 per cent above inflation every year.”