A UK Ministry of Defence (MoD) official claimed that the recent growth in the defence budget has exceeded the last recorded military equipment deficit in 2023.
David Williams, the Permanent Secretary, the most senior civilian official in the MoD, made the observation during a Defence Committee hearing on 2 July 2025, where he joined the Defence Secretary John Healey to clarify recent developments in UK defence policy in the last several weeks.
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Budget in figures
In December 2023, the National Audit Office, the UK’s public spending watchdog, found that the Equipment Plan reached a deficit of £16.9bn ($23bn), the largest shortfall since 2012, when the MoD began publishing an annual breakdown of the equipment the armed forces need.
The recent rise in the budget was laid out in the Spending Review, published on 11 June, which set defence spending at 2.6% from 2027, with an ambition to reach 3% in the next Parliament (sometime after 2029).
In raw figures, the Institute for Fiscal Studies (IFS) found that increasing spending on ‘core defence’, meaning direct military capabilities, from 2.6% to 3.5% of national income – a target for 2035, agreed upon at the Nato Summit last week – would mean spending around an additional £30bn a year.
In a Public Accounts Committee (PAC) report published on 20 June, parliament determined that the Defence Nuclear Enterprise will add pressure on the department’s overall budgets.
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Forecast nuclear costs for the ten years beginning 2023–24 have increased by around £10bn – a third of the rising funds added to the latest budget, according to IFS estimates – from £117.8bn (to approximately £128bn). And this only accounts for the bump in inflation and other factors which have added to nuclear costs; the total sum, however, will be considerably higher.
This offers some sense of the cost growth to come for defence requirements at a time of global animosity and the soaring demand. While the budget has grown, as Williams states, it will not offset for burgeoning needs.
An outdated Equipment Plan
While the budget, as it is now, given the recent growth, does exceed the multibillion pound shortfall, Williams only offered the comparison to demonstrate the new level of investment in defence.
At the same time, he reminded the Committee that this is an old Equipment Plan put forward by the previous Conservative government which differs from the equipment lists of the incumbent Labour government. Their requirements are hinted at in the Strategic Defence Review published on 2 June.
“We’ve started engaging the National Audit Office about how we might engage them in that work as it goes along so that they can produce their assessment of our plan once it’s published” in the Defence Investment Plan (DIP) in the autumn period, Williams outlined.
If the DIP accounts for specific military capabilities and provides a cost analysis for these requirements, as Williams suggests, then it would contradict Healey’s previous claims from his first session with the Defence Committee in November last year, in which he stated he would likely defer the publication of an Equipment Plan in 2025.
Nevertheless, this appears to be the first time that the MoD have provided a brief glimpse at how it will put forward budget costs to the public and parliament for scrutiny. The PAC report has expressed disappointment that the Permanent Secretary did not have any concrete suggestions for reporting its plans.
Strategic Defence Review
The Strategic Defence Review touches on various new capabilities to support conventional military operations, and it seems the government’s expectations exceed the costs the UK will have to deliver them.
It is worth examining one strategic enabler in particular. The MoD have agreed to pursue a new situational awareness and data transfer concept known as the Digital targetting Web. It is a system-of-systems model designed to integrate all nodes – sensors, deciders, and effectors – across the whole battlespace, funneling intelligence into a single, shared platform.
The authors of the review suggest the entire concept will cost a little over £1bn to deliver by 2027. Upon closer inspection, this cost estimate is questionable given the all-encompassing nature of the concept.
These funds will not only have to cover the cost of all the sophisticated nodes and weapon systems, but also space-based enablers and the protection of these assets in space, which has become a domain in its own right, with adversaries advancing their offensive capabilities on satellites.
Moreover, the F-35 aircraft will prove to be one of the most sophisticated data sponges in the network, and the platform has yet to reach its full potential.
The Royal Navy and Royal Air Force are still waiting on Lockheed Martin to implement the TR3 and Block 4 upgrades, an enhancement which the US supplier labelled “the most aggressive update” yet in a media briefing during the Paris Air Show.
