UK vow to spend 2% on defence ‘is accounting trick’

BRITAIN will only hit the Nato target of spending 2 per cent of national income on defence because of accountancy tricks, a key report reveals today.

Chancellor George Osborne has made ‘significant changes’ to how Britain calculates i ts military budget to reach the benchmark, according to the Royal United Services Institute (RUSI).

For the first time, war pensions, contributions to UN peacekeeping missions, payouts to retired civil servants and Ministry of Defence income have been included.

The defence and security think-tank says stretching the definition of defence spending will allow the Government to add 14 per cent, or £5.7billion, to the total by 2020.

Some of the intelligence and security services’ £2.2billion-a-year budget will also come under defence, Mr Osborne said in his Budget this month. But Professor Malcolm Chalmers, director of UK defence policy at RUSI, said the practice could undermine the credibility of Nato’s target.

No10 was under pressure from Tory MPs, top brass and the US to ensure the UK continued to spend 2 per cent of national income on defence.

David Cameron has been warned that cuts to the Armed Forces would be unwise while the West faces a new Cold War with Russia and the rise of Islamist extremism.

He was told a fall in funding would lead to budget cuts for training, equipment and military missions – further reducing Britain’s global standing.

But in the Budget, Mr Osborne caused a surprise by announcing that the MoD would receive a real-terms cash increase of 0.5 per cent a year, taking its budget to around £38.9billion by 2020-21.

Using previous counting rules, the UK would have spent £36.8billion on defence in 2015-16 – or 1.97 per cent of GDP. Instead, it is projected to spend £39billion – or 2.08 per cent.

The report says that maintaining the 2 per cent commitment through to 2020 ‘is likely to require yet further adjustments in the UK’s counting methodology’ to take into account the growth of the economy.