An extra £1bn to fund Britain’s defence has been found by Sir Keir Starmer, following John Healey’s resignation over the issue earlier this month.
The Defence investment plan (Dip), originally due last year, has been held back amid furious wrangling within government over the amount of money required to finance the military.
Under the stewardship of new defence secretary Dan Jarvis, the Dip will now focus on ramping up the UK’s use of drones and autonomous weapons, funded by a £5 billion investment, the Ministry of Defence (MoD) has announced.
Mr Jarvis is thought to have made better progress negotiating with the Treasury on funding and the plan will be published on Tuesday, with a full settlement of £14.5bn – up from the £13.5bn offered to Mr Healey but short of the £28bn officials previously said was needed.
Mr Healey had argued the Dip did not provide enough funding for the UK to transform its armed forces and meet future threats, throwing Sir Keir’s government into further turmoil.
He also warned that the plan would likely fall short of Britain’s commitments to the Nato alliance, which has tasked all member states with hiking core defence spending to 3.5 per cent of national economic output by 2035.
The government has pledged to allocate 3.5% of GDP to defence by 2035 but Mr Healey noted that spending is projected to reach only 2.6% next year, climbing marginally to 2.68% by 2030.
It is understood that the Treasury's previous offer did not specify a timeline for reaching a 3 per cent spending target, reportedly attempting to compel the Ministry of Defence to delay this milestone until the 2034/35 financial year.
How much does the Government spend overall?
The Government spent about £1.2 trillion on behalf of taxpayers in 2024-25, the Institute for Fiscal Studies said.
This represents 39.9 per cent of national income, which is spread across a range of policy areas and services in the regions and nations of the UK.
Some 80 per cent of overall spending was identified as attributed to a particular region of the UK, while 18 per cent was categorised as benefiting the UK as a whole.
This category includes defence and the costs of managing national debt.
How much does the Government spend on defence?
Spending on the military, equipment and operations, including aspects such as the armed forces and the intelligence services, was £64bn in 2024-25.
This figure represents 5.5 per cent of overall Government spending and 2.2 per cent of GDP, the highest proportions in both indicators since 2011-12.
The £59bn spent in 2023-24 was the first annual total decrease in defence spending since 2016-17 while between 2016-17 and 2019-20, there were historic lows in defence spending as a percentage of GDP.
What is the largest area of expenditure?
Categorised as “social protection”, but generally referenced as welfare, is the Government’s biggest outlay.
In 2024-15, 33 per cent of Government spending was on benefits, pensions and social services, amounting to £386bn, or 13 per cent of GDP.
Of the overall welfare spending, the largest proportion was allocated to pensions and old-age benefits (40%), followed by universal credit and other benefits (20%).
How much does the Government spend on health?
Spending on health is also a big focus, with £242bn spent in 2024-25 and, like welfare, levels has been on a generally consistent upward trend for decades.
The latest spending represented 21 per cent of overall spending, 8 per cent of GDP and £3,497 per person.
How does spending on education compare?
Education represented the third biggest annual outlay on a service area in 2024-25, with £123bn accounting for 10.5 per cent of total spending.
This is an increase of about £30bn since 2010-11. However, 2024-25 education spending was 4% of GDP whereas it was 5.6 per cent 15 years ago.
Education funding as a percentage of overall spending has fallen significantly since 2010-11 when it was 14 per cent. It now accounts for 10.5 per cent.
About 80 per cent of the budget is currently spent on primary and secondary education.
What about spending on policing and crime prevention?
Public safety is another highly politically charged policy area, with public concerns about safety, police numbers and access.
Total spending in this area has increased consistently since 2016-17, with funding rising from £30bn in 2016 to £52bn last year.
But in 2010-11, the then-government was spending about the same percentage of GDP as the current one in this area.
The 2024-25 level represents about 5 per cent of total Government spending and 2 per cent of GDP.
Police services account for half of the annual total spending, followed by law courts (18 per cent) and prisons (13 per cent).
What is happening with other spending areas?
Transport spending currently accounts for 4 per cent of the Government’s annual outlay, followed by central government services (2 per cent) and housing, communities and local government (2 per cent).
What else is the Government allocating money to?
The Government allocates 1 per cent of its annual spending to managing public sector debt interest.
The cost of this has spiked since 2020, from 4 per cent of total spending to 11 per cent last year.
The Government spent £125bn in debt costs in 2025, meaning spending in the area, when combined with health and benefits, accounts for nearly two-thirds of all annual Government spending.
