Streeting denies 'kicking can down the road' in defence spending row

The government has faced criticism for not setting out a pathway at Wednesday's Budget to hit its target of spending 3% of GDP on defence by 2030.

It comes as Chancellor John Healey and Streeting announce that foreign firms which are awarded defence contracts of more than £50m will need to invest an equal value back into the UK.

Under the new investment rules, described as an "offset strategy", these companies will need to spend an equivalent amount on British factories, jobs and training.

The Ministry of Defence will apply the rules on a "case-by-case" basis from April 2027, the government said. Healey and Streeting will unveil the policy on a visit to UK defence contractor BAE's shipbuilding site in Glasgow later.

While ministers hope the rules increase investment in Britain's defence industry, they appear designed to do so in a politically palatable way rather than committing to spending cuts.

Tan Dhesi, Labour chair of the cross-party Commons defence committee, said on Wednesday that decisions had been "kicked into the long grass" to next year's government spending review, rather than announced in the Budget.

Streeting hit back at these comments as "unfair" and "unfounded".

"We had hoped to see that the chancellor would set out a precise pathway to spend 3% of GDP on defence by 2030," Dhesi told BBC Radio 4's Today programme.

He praised the government for plugging a £4.7bn hole in the Defence Investment Plan in the Budget, through asking government departments to cut their capital budgets by 1%.

"And I don't think the charge he makes of delaying or kicking the can down the road stacks up against the extra money that is already going into defence and the capability we're funding right now."

Streeting told BBC Breakfast the new rules, aiming to create "bang for the British buck", would help achieve this target given increasing defence spending "does come at a cost to the country and other things we'd like to spend money on".

He said waiting for the spending review, which does not have a fixed date and could come in the second half of 2027, was "the right thing to do" so ministers can look at "spending in the round".

"There's no sugarcoating the fact that our Armed Forces were under-invested in for more than a decade," he told Breakfast.

Defence analysts have questioned the government's ability to deliver on its 2030 target and the Nato-wide target of 3.5% by 2035. UK defence spending is at an estimated 2.6% of GDP this year.

Tory leader Kemi Badenoch said on Wednesday that Healey "failed his own test" by not setting out a "plan for 3%".

In the Budget, Healey said the UK was negotiating with Finland, Poland and the Netherlands to set up an international bank - the Multilateral Defence Mechanism - to boost defence investment and joint procurement.

"The answer is not more borrowing – it's to cut welfare to fund defence," he said.