Keir Starmer’s flagship Defence Investment Plan is facing mounting scrutiny after ministers admitted they have yet to identify where billions of pounds of the funding will come from, prompting critics to warn that Labour has created a potential £15 billion defence black hole.
The outgoing Prime Minister this week unveiled a long-delayed Defence Investment Plan, promising an additional £15 billion for Britain’s armed forces over the next four years.
The announcement was presented as a major boost for national security amid growing international instability and increasing pressure from NATO allies to raise defence spending.
However, within hours of the announcement, serious questions began to emerge over whether the money actually exists.
While ministers have confirmed that £4.7 billion of the package will not be allocated until the autumn Budget, a further £10.3 billion is supposed to come from departmental “efficiency savings” and spending reductions that have yet to be identified.
The result is that much of the funding remains little more than a promise on paper.
Former Foreign Secretary James Cleverly was among those raising concerns.
Writing on X, he said: “It’s far worse than a £5bn black hole. There’s also about £10bn of unidentified efficiency savings. This Labour government has failed to deliver efficiency savings anywhere else, so confidence cannot be high that Burnham will. That’s a £15bn defence black hole.”
“It’s far worse than a £5bn black hole. There’s also about £10bn of unidentified efficiency savings. This Labour government has failed to deliver efficiency savings anywhere else, so confidence cannot be high that Burnham will. That’s a £15bn defence black hole.”
The criticism reflects growing scepticism over Labour’s claims that it can fund a major expansion of defence spending without either increasing borrowing, raising taxes or imposing painful cuts elsewhere.
According to reporting by The Telegraph, Downing Street was unable to explain where the £10.3 billion of savings would come from when pressed following the announcement.
Instead, ministers said details would be provided in the autumn, conveniently after Sir Keir is expected to have left office and Andy Burnham has taken over in Downing Street.
That leaves the Prime Minister-in-waiting facing the prospect of finding billions of pounds in savings, deciding which projects to cancel and explaining to voters where the money will come from.
Labour ministers insist that every government department has been instructed to find savings equivalent to 1 per cent of its budget, with larger departments expected to contribute more. Yet when asked which programmes would be cut, ministers were only able to point to a handful of road projects.
Among those potentially facing cancellation are the A38 Derby Junctions scheme and the A46 Newark Bypass.
Downing Street also declined to rule out reductions to future hospital building programmes, although ministers insisted that hospitals affected by unsafe reinforced autoclaved aerated concrete (RAAC) and projects already underway would be protected.
The Treasury has suggested that departments will also be expected to sell government assets, including land and buildings, while delaying or cancelling lower-priority projects.
However, no detailed list of savings has yet been published.
The row has also exposed divisions over Labour’s wider economic strategy.
During Prime Minister’s Questions, Sir Keir appeared to suggest that some of the funding gap could be bridged using around £22 billion of fiscal “headroom” created in previous Budgets.
Critics argue that this merely underlines how little certainty exists around the funding arrangements.
Meanwhile, Chancellor Rachel Reeves used an article in The Telegraph to warn against borrowing more money to fund defence spending, arguing that excessive debt would weaken Britain’s resilience to future economic shocks.
Her comments were widely interpreted as a warning to Labour’s next leadership team that difficult spending decisions cannot be avoided indefinitely.
The concerns come at a time when military leaders are arguing that even Labour’s new spending plans fall short of what is required.
Air Chief Marshal Sir Richard Knighton has said Britain will need to spend 3.5 per cent of GDP on defence to meet NATO commitments and deliver the ambitions of the Strategic Defence Review.
Under Labour’s plans, defence spending is expected to reach only around 2.7 per cent of GDP by 2030.
That means that even if the Government succeeds in finding the missing £15 billion, pressure for further spending increases is likely to continue.
For critics, the episode raises a familiar question: has Labour announced a headline-grabbing spending package before working out how to pay for it?
With £4.7 billion still awaiting Budget approval, £10.3 billion of savings yet to be identified and difficult decisions apparently postponed until after Sir Keir leaves office, opponents argue that the Defence Investment Plan risks becoming another example of a government making promises today while leaving somebody else to deal with the bill tomorrow.
As the details continue to emerge, the focus is shifting from Labour’s defence ambitions to a more basic question: where exactly is the money coming from?
