Bonds raised as option to accelerate UK military spending

A proposal to use defence bonds to accelerate UK military investment was raised in Parliament today, as MPs debated how to close what has been described as a multibillion-pound funding gap in defence.

Liberal Democrat defence spokesperson James MacCleary argued that while there is broad agreement on the need to increase defence spending, the pace of investment is falling short of what the security environment demands.

He warned against funding increases by cutting other areas such as international development or renewable energy, describing that approach as “just robbing Peter to pay Paul.”

Referring to warnings from the Chief of the Defence Staff, MacCleary said there was a £28 billion shortfall in defence funding and urged ministers to consider a new financing mechanism. “I want to offer the Secretary of State a practical, costed way to close much of that gap. Defence bonds,” he told the House. He said the proposal could raise around £20 billion over the next two years and channel investment rapidly into military capability and the defence industrial base, including small and medium-sized enterprises. He asked whether the government would give the idea “serious consideration as part of a clear funded plan to plug the funding gap and get defence investment moving.”

Defence Secretary John Healey responded by pointing to the government’s existing spending commitments, contrasting them with previous opposition positions. “This is a government that has made a commitment and is making a record investment in defence,” he said, describing it as the largest increase since the end of the Cold War. Healey added that the government would consider “any potential way of raising the level of investment going into defence,” but pushed back on criticism of its funding approach, noting plans to reach 2.5% of GDP and beyond in the coming years.