Defence expenditure and the 2% pledge: the NATO 2% target

DOT

Old-Salt
The House of Commons Defence Committee is holding an evidence session into its inquiry on defence expenditure and the 2% pledge from 11:30am today.

This is the second session for this inquiry. Discussion will concentrate on the origin of the NATO 2% target on defence spending and its relevance to UK defence spending.

You are able to watch live or catch up on Parliament TV.



Witnesses

The Committee will hear from the following people today:

Professor Julian Lindley-French, Senior Fellow, Institute of Statecraft
Jonathan Parish, Deputy Assistant Secretary General for Defence Policy and Planning, NATO General
Sir Richard Shirreff KCB CBE, former Deputy Supreme Allied Commander Europe

Further Information

For more information about the original inquiry, please read the announcement of the inquiry.

Previous session

The first session for this inquiry concentrated on an examination of the UK’s commitment to spend 2% of GDP on defence, the nature of different types of expenditure that are included in this 2% figure and the relationship between expenditure and capabilities.

Witnesses were Professor Malcolm Chalmers, Royal United Services Institute (RUSI), Professor Keith Hartley, University of York, and Dr Robin Niblett CMG, Director, Chatham House.

Watch the first session on Parliament TV.
 

DOT

Old-Salt
Today at 11.30am, the Defence Committee is holding its third and final evidence session on Shifting the goalposts? Defence expenditure and the 2% pledge.

Witnesses

Tuesday 1 December 2015, Grimond Room, Portcullis House

The Committee will be hearing from:
  • Rt Hon Michael Fallon MP, Secretary of State for Defence
  • Air Marshal Sir Steven Hillier KCB CBE DFC RAF, Deputy Chief of Defence Staff (Capability)
  • Peter Watkins, Director General for Security Policy
You are able to watch live or catch up later via Parliament TV.
 

DOT

Old-Salt
The Defence Committee has published its report on defence expenditure and the 2% pledge, which concludes that the Government has achieved its 2% commitment to defence spending in the last year only through what appears to be creative (albeit permissible) accounting.

The Committee welcomes the Government's commitment not to fall below the NATO recommended minimum of spending 2% of GDP on defence each year for the rest of the current Parliament. This sends an important message to UK partners and potential adversaries.

But quite what accounts have been included in the definitive Defence Budget, both now and in the past, are unclear.

Read the report: Shifting the Goalposts? Defence expenditure and the 2% pledge

Creative accounting
The Ministry of Defence (MoD) has been unable to provide a robust data set identifying which years the costs of operations or the purchase of urgent operational requirements were included in its calculation of UK defence expenditure submitted to NATO. Such inclusions are allowed by NATO, but the lack of clarity confuses anyone’s ability to make year on year comparisons of the Defence Budget.

In accounts for 2010 and 2015, provided by the MoD, the new inclusions of the 2015 accounting strategy are difficult to identify. The only way that the MoD can refute claims of 'creative accounting' is to outline, clearly and unambiguously, what the new inclusions are and from which Department each was funded previously.

Decline of UK defence expenditure
Despite the UK's high ranking, in terms of defence spending, relative to other NATO members, UK defence expenditure has fallen far too low in the UK’s national priorities.

The decline in defence spending is set out in tabular form in the Report and contrasts sharply with the hug rise in expenditure on health, welfare, education and overseas development.

The world today is at its most dangerous and unstable since the end of the Cold War. While 2% is arguably a useful metric by which to measure a county’s commitment to NATO, it does not solely determine whether our total expenditure on defence is sufficient, given that the UK has significant additional commitments such as our defence of the Falkland Islands. Some of the costs of these UK commitments are additional to our NATO role, and therefore constitute an additional requirement for UK defence expenditure.

Until and unless the MoD quantifies the net additional costs of the UK’s commitments beyond NATO, the Committee cannot be confident that our 2% is enough, whether in terms of quantity or capability. The Committee remains to be convinced that the current financial settlement is sufficient to rectify the decline of defence as a national priority.

Chair's comment
Defence Committee Chairman, Dr Julian Lewis MP, said:

"It’s good news that we have managed to achieve the 2% promise for Defence Spending but if the MOD has only achieved this by including things like war pensions or intelligence gathering which previously came under other budgets, you wonder what effective, battle-winning spending increases have actually been made. The MoD have shed insufficient light on this confusion."
 

4(T)

LE
Whats defence spending as a % of government expenditure, as opposed to GDP? (I.e. given the government is actually living off its extended credit card limits, and not its income).
 
Whats defence spending as a % of government expenditure, as opposed to GDP? (I.e. given the government is actually living off its extended credit card limits, and not its income).
In 2015 it was 6%, ie £45.1bn out of a £760bn total expenditure according to this:
UK Defence Spending in 2016 - Charts
However that figure also includes £8.7bn Foreign Economic Aid which may or may not be strictly defence-related.
 

DOT

Old-Salt
On Thursday 27 October from 1.30pm, MPs will be debating their report 'Shifting the goalposts? Defence expenditure and the 2% pledge' and the Government response in Westminster Hall.

You can watch this debate live or catch-up later on Parliament TV.
 

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