Equipment spending fell by five billion in a year

Defence equipment spending in the year to March 2026 was £5 billion lower than in the previous year, which industry witnesses described as an indication of the Ministry of Defence working to stay within its budget, according to evidence given to the Defence Committee.

Kevin Craven, chief executive of ADS, gave the figure during a session on the implications of the Defence Investment Plan for British industry.

He said: “In terms of orders, what is probably interesting to note is that the equipment spend to the year ending March 2026 was £5 billion less than in the previous year, which is an indication of the MOD looking to remain within its budget or live within its means. We are hearing all of this language. The lived experience on the ground is that it is still hard to get orders.”

Craven said there have been procurement announcements since the plan was published, including the Royal Oak programme for the mobile docks on the Clyde and rapid procurement processes covering £1.4 billion around defence artificial intelligence.

He also told MPs that it was unclear whether around a third of the £298 billion announced in the plan is unfunded or simply not articulated in the right way.

On the additional £15 billion provided to defence, Craven said: “We are concerned. The MOD has a long history of baking in efficiency savings to its plans and then not necessarily being able to deliver them. The commitment to deliver those is not the same thing as doing so.”

He pointed the committee to a change in the department’s own provisions, saying: “One of the interesting things about the DIP was that the central contingencies held by the MOD were increased from 1.2% to 2% over the spending period, which is perhaps indicative of some of their own cynicism around the ability to deliver those efficiencies and savings.”

Craven said the difficulty of transforming the department while implementing a major shift in capability makes the savings harder to realise.

Julian David of techUK told the committee that nearly £5 billion is dependent on the Budget, and that there was potential confusion over whether the Budget would deliver it or whether it would wait for the spending review. He said waiting would be a very big mistake and would compound delays already identified.

Wes Streeting, the Secretary of State for Defence, told the committee the previous week that the Chancellor has said he will plug a £4.7 billion gap at the Budget, with more to come at the spending review. Jeremy Pocklington, the Permanent Secretary, told MPs that additional support received between John Healey’s resignation and Dan Jarvis settling the plan increased the department’s spending power by £15 billion.

Craven told the committee that the National Armaments Director group, the aggregation of departments now reporting to Rupert Pearce, numbers some 25,000 people, and that transforming the department while implementing a strategic shift is causing large amounts of pain within it.