Chancellor John Healey has instructed every government department to locate 1% cuts in their capital budgets, all to plug a £4.7bn hole in the Defence Investment Plan. This comes hot on the heels of the 1% cuts departments were already asked to make earlier this year, which covered the initial £10.3bn of the plan's £15bn total price tag. So, to recap: cut once, cut twice, and hope nobody notices the maths.
The plan did boost defence spending, but Healey is still under pressure to explain how he'll hit the further target of spending 3% of national income on defence by 2030. Conservative leader Kemi Badenoch was unimpressed, accusing the chancellor of offering "a plan to have a plan" and adding, with a straight face: "I bet [Vladimir] Putin's really scared now." One assumes the Kremlin is quaking.
In his Budget speech, Healey hinted that meeting the 3% goal would require further cuts, telling MPs it would involve "looking hard at public spending." He promised to set out exactly how the UK would reach 3% by 2030 - and 3.5% of GDP by 2035 - at next year's spending review. Departments have yet to decide what will be chopped from their capital budgets, which focus on long-term investments rather than day-to-day spending. Earlier this year, several major road improvement schemes were scrapped to pay for increased defence spending. Priorities, people.
Badenoch wasn't done, criticising Healey for failing to use his Budget to explain how he'd boost defence funding to 3%. "He is the man who is making our country less safe. He has failed his own test. This is on him, and no one will ever forget," she said. The Conservatives have previously urged the government to pay for defence by cutting the welfare budget - because nothing says 'safe' like trimming the safety net.
Nato Secretary General Mark Rutte offered a more diplomatic take, saying the UK was on "a credible path towards meeting the commitment made by all Nato Allies in The Hague - to ensure we're all investing what's needed to remain ready & able to deter aggression and defend our freedom and security."
Awkwardly, earlier this year Healey resigned as defence secretary, accusing then-Prime Minister Sir Keir Starmer of not providing enough money to keep the UK safe. In a scathing resignation letter, he emphasised his belief in the importance of reaching a 3% target by 2030. Now, as chancellor, Healey told the House of Commons on Wednesday: "At the spending review next year, I confirm that I will set out the details of how we will meet our NATO commitment to spend 3.5% of GDP on defence by 2035, with a target date for 3% in 2030. And today, I am getting work under way to get there in a fiscally sustainable way."
Beyond looking at public spending, Healey said he wanted to use "more innovative financing alongside the private sector and our international allies." Cue a list of initiatives: starting treaty negotiations with Finland, Poland and the Netherlands to set up a "multilateral defence mechanism" allowing allies to share resources; increasing private investment in defence through public-private partnerships; and directing the National Wealth Fund and British Business Bank to put £5bn into "defence, dual-use technology and sovereign capability."
The Office for Budget Responsibility estimates that the UK government's target to increase defence spending to 3.5% of GDP by 2035 will cost £35bn. Helen Millier, director of the Institute for Fiscal Studies, offered a reality check: "Increasing investment in defence companies may contribute to the target but it is unclear how much this will lead to an increase in UK defence capabilities. There is much further to go to get to 3% of GDP on defence and it is hard to believe that this government will want to get there without topping up spending totals." In other words: nice try, but the maths still doesn't math.
In his Budget speech, Healey also announced £10bn of economic and military support for Ukraine, in the form of loans and export guarantees. The funding includes £5.5bn of loans through World Bank guarantees and a grant contribution to the World Bank International Development Association's crisis facility. A further £3bn will be made available to Ukraine through loans facilitated by UK Export Finance, a government export credit agency. Healey told the House of Commons that the week had started with Russia launching a "brutal ballistic missile attack" and that the extra money would send "a clear message to Moscow." He said that when he told Ukrainian leader Volodymyr Zelensky about the additional support in a phone call, Zelensky had said: "You've made my day." Later on social media, Zelensky welcomed the money, saying: "Every step to strengthen Ukraine brings Russia closer to realising that it must end this war of its own making." The money comes on top of the UK's pledge to provide Ukraine with £3bn of military support until at least 2030-31.
So, to summarise: everyone's finding 1% cuts, the chancellor is 'looking hard' at spending, and the UK is sending more money to Ukraine. Putin, presumably, is quaking in his boots - or at least checking his Starlink connection.