The Treasury has not carried out any analysis of the trade-offs needed for the UK to hit its Nato defence spending promise of 3.5% of GDP, the department's chief secretary has admitted. Under robust questioning in a joint session of the Treasury and defence committees on Wednesday, Lucy Rigby repeatedly told MPs that funding additional defence spending would be a matter for “the next prime minister”. Keir Starmer, who is attending his last Nato summit in Ankara, has promised the UK will reach the target by 2035. But when asked if the Treasury had done any number-crunching, Rigby said: “These are decisions for the future government to make.” The Treasury committee chair, Meg Hillier, reminded Rigby: “You are the chief secretary of the Treasury. You’re the one in the government who oversees all the public spending.” Pressed on whether she had “done an analysis of the trade-offs that would need to be done, in the short or long term”, Rigby first deferred to the Treasury official beside her, then responded: “No, is the short answer.”
The government has set an interim target of spending 3% on defence in the next parliament, but the path to that has not been laid out – a question Rigby said would be left for the next spending review, due in mid-2027, by which time Andy Burnham is expected to be prime minister. “We’ve said for the next parliament, we will get to 3%. And I understand that the question is being asked when in the next parliament. And I come back to the fact that the prime minister has said that defence will be the number one priority at the next spending review,” she said. Rigby repeatedly stressed the difficult decisions ahead, saying: “It’s not straightforward: money is finite.”
“Treasury admits no analysis on how to fund 3.5% defence pledge, leaving it for next PM.”
The scale of the shift was underlined by committee member Bobby Dean, who pointed out that reaching the 3.5% target would require “£30-40bn extra, equivalent to 3p to 4p on all rates of income tax”. Rigby said there would have to be a debate about “public consent” for such a change. The failure to set out a future spending path was among the reasons for the dramatic resignation of John Healey as defence secretary, which occurred in the run-up to the publication of the contentious defence investment plan. That plan set out an additional £15bn of funding for the department over the next four years, taking it to 2.7% of GDP. Whitehall departments have been asked to cut investment plans to fund the shift, but Rigby conceded that an extra £4.7bn will also have to be found in the autumn budget. The admission raises questions about how the government intends to fulfil its Nato commitments without a clear financial roadmap, leaving the heavy lifting to a future prime minister.