Almost a third of defence boost rests on autumn Budget

Almost a third of the £15 billion increase at the heart of the Defence Investment Plan has yet to be pinned down and will only be settled at the autumn Budget, the Chancellor’s funding statement showed.

In a written statement setting out how the money would be raised, Rachel Reeves said that of the £15 billion, £10.3 billion had been identified now, with a further £4.7 billion over the four years to be confirmed at Budget 2026, which she said would be done “in a fair and balanced way.” The remaining sum is not a marginal one, amounting to close to a third of the headline figure, and it is the part of the package for which the savings have still to be named.

The timing sharpens the point, because the figures published with the statement show the money still to be confirmed is weighted towards the early years, with £1.8 billion of it falling in the current 2026-27 financial year before tapering to £1.1 billion, £1.0 billion and £0.9 billion across the three years that follow. The single largest slice of the still-to-be-settled money is therefore needed first, in the year already under way, with the Budget meant to confirm it still months off.

The statement set out, in general terms, how that gap is to be closed, with the Treasury saying departments would find efficiencies, cancel or delay lower-priority programmes and sell assets including underused land and buildings, drawing on what it put at £1.9 trillion of holdings across government. The detail is left for later, with the statement noting that departments would bring forward their plans in due course, and that even some of the savings already counted, the up to £700 million from roads budgets at the Department for Transport and the £2 billion from the Department for Energy Security and Net Zero, would not be fully set out until the autumn.

The government has set out more of where those savings would fall, and its case is that they come from lower-priority and not-yet-committed work rather than from frontline services. A funding explainer published alongside the statement said departments had been asked to find “1p in every £1” of their capital budgets from this year, and that the Department for Transport’s contribution would come partly from a consultation on cuts to its third roads investment strategy, among them the possible cancellation of the A38 Derby Junctions and A46 Newark Bypass schemes, which it said had yet to enter contract and were less far advanced than other projects, with stakeholder consultations to be held before any decision is taken.

The paper said funding to fill potholes, to maintain local roads and to build rail projects including Northern Powerhouse Rail would be protected, and that the energy department would find its share while, it said, continuing to support renewable and nuclear construction. The Treasury described the choices as tough but necessary, and said they had been made without drawing on day-to-day spending for frontline services, characterisations that will be tested as the consultations run and the detailed plans appear later in the year.

The reliance on asset sales is itself loaded into the later years and carries its own uncertainty, since the figures show land and buildings raising nothing in the first year and then £0.3 billion, £0.3 billion and £0.5 billion in the years after, money that depends on finding buyers at the right price for property the government has not yet identified. That places a portion of the funding beyond the Treasury’s immediate control, resting instead on disposals that have still to be lined up.

Beyond the four-year package, the larger ambitions in the plan rest on decisions not yet taken. The commitment to spend 3% of GDP on defence is for the next parliament, with the funding and the profile to be set at the next spending review, and the further goal of 3.5% by 2035 sits further out still, both of them dependent on choices that a future government, with a different prime minister and chancellor, would have to make and pay for. Reeves’ statement casts defence as the number one priority for that review, language the Treasury has rarely used so far in advance, although the spending it points to has yet to be allocated.