Estimates Day debate: Spending of the Ministry of Defence

On Wednesday 25 June 2025, there will be an Estimates Day debate on the spending of the Ministry of Defence (MOD) and the remit of the National Armaments Director. The topic for the debate was proposed by the Backbench Business Committee, on application from Sir Geoffrey Clifton-Brown MP, Chair of the Public Accounts Committee. Following the debate, the House will vote on whether to approve the Main Estimate for the MOD for 2025/26.

What are the Estimates?

Estimates are the documents presented to Parliament setting out the government’s plans for spending for a given year. The government is required to obtain authority from Parliament before it can spend public money, through votes on the Estimates known as the supply process. The approved spending in the Estimates is voted for use only in a particular year. The normal steps in the supply process are as follows:

• Vote on Account: consideration and approval of an advance of funding for the first four months of the financial year (April to July) for each government department. The Vote on Account is normally published in February and approved by Parliament in March, in time for the start of the new financial year in April.
• Main Estimates: consideration and approval of the spending plans for the new financial year for each government department. Main Estimates are normally published in April or May and voted on in July. Money already authorised through the Vote on Account is deducted from the amounts required for the year to provide government with funding for the remainder of the financial year.
• Supplementary Estimates (where required): consideration and approval of any changes to amounts or purposes of money required by departments. Supplementary Estimates are normally published in February and approved in early March to allow for any additional funds to be spent before the end of the financial year.

Content of an Estimate

Within each Estimate, spending is divided into four distinct budgetary limits for each department, covering spending of a specific type: resource DEL, capital DEL, resource AME and capital AME. Changes to the categorisation of spending require prior consultation with Parliament. Switches of funding between categories are not normally permitted by the Treasury.

Ministry of Defence Main Estimate 2025/26

The initial Ministry of Defence (MoD) budget provided in the Main Estimates each year generally differs from the final budget from the previous year as significant adjustments are routinely made during the Supplementary Estimates. The Supplementary Estimate, likely to be published in February 2026, will update the Main Estimate to set the final budget for 2025/26.

The restructure of the MOD to establish the National Armaments Directorate has not yet taken place, and it is not possible to identify how much the MOD plans to spend through the National Armaments Directorate.

Day-to-day spending (Resource DEL)

MOD has set its Resource DEL budget to increase by £995.0 million (+2.1%) from £46,393.7 million to £47,388.7 million.

Investment spending (Capital DEL) 

MOD has set its Capital DEL budget to increase by £363.5 million (+1.6%) from £22,703.6 million to £23,067.1 million.

Demand-led spending (Annually Managed Expenditure)  

MOD has set its Resource AME budget to decrease by £6,864.6 million (-80.0%) from £8,584.1 million to £1,719.5 million and its Capital AME budget to decrease by £4 million (-80.0%) from £5.0 million to £1.0 million.

Spending Review

The government published its Phase 2 Spending Review on Wednesday 11 June 2025. The Spending Review set out departmental Resource DEL spending plans for 2026/27 to 2028/29 and departmental Capital DEL spending plans for 2026/27 to 2029/30.

The Spending Review only set out the DEL portion of the MOD budgets and excludes both volatile AME expenditure and depreciation costs. Therefore, the allocation in the Spending Review does not set out total MOD spending for the period.

The DEL-only allocations set out for future years in the Spending Review are not within scope of the vote on the Main Estimate.

The MOD’s total DEL allocation is a 3.6% average annual growth rate over the spending review period since 2023/24, in real terms. The DEL increases are significantly weighted towards investment (Capital) funding, rather than day-to-day (Resource):

• Day-to-day (Resource) DEL spending is set to increase in real terms by an average of 0.9% per year from 2023/24 to 2028/29, lower than the average increase across all departments, which was 1.7%.
• Investment (Capital) DEL spending is set to increase in real terms by an average of 7.1% per year from 2023/24 to 2029/30, significantly higher than the average increase across all departments, which was 3.6%.
• Under the Spending Review spending plans, defence spending including the intelligence agencies will reach 2.6% of GDP by April 2027, in line with the announcements at the Spring Statement 2025.

The chart below shows the Ministry of Defence departmental spending plans adjusted to 2024/25 prices.

Source: Ministry of Defence, Defence departmental resources: 2024, Table 1 (outturn); HM Treasury, Spending Review 2025 document, June 2025, Table B.1 (plans); HM Treasury, GDP deflator, March 2025 (Spring Statement 2025)

How much is currently being spent on defence?

In the 2024/25 financial year, the UK spent £60.3 billion on defence. This is a cash increase of £6.4 billion compared with 2023/24. After adjusting for inflation, defence spending increased by £4.4 billion (7.8%).

As a member of NATO, the UK is committed to spending 2% of GDP on defence expenditure that meets NATO’s definition. The latest NATO estimates show that the UK spent 2.3% of GDP on defence in 2024/25.

The government has committed to spend 2.5% of GDP on defence by 2027, with an ambition to increase this to 3% in the next Parliament.

Members of NATO have reportedly agreed to increase the proportion of GDP spent on defence and national security to 5% at its summit at The Hague on 24 June 2025. NATO’s Secretary General said before the summit that this commitment is likely to consist of two parts: 3.5% on core military spending and an additional 1.5% on defence and security-related investments, including infrastructure.

Defence equipment spending

The Ministry of Defence (MOD) spends billions each year on equipment for the armed forces.

It published a Defence Equipment Plan each year from 2012 to 2023. The Strategic Defence Review (June 2025) announced plans to replace the Defence Equipment Plan with a new 10-year Defence Investment Plan by autumn 2025.

In the Equipment Plan for 2023 to 2033, the MOD allocated £288.6 billion to spending on equipment and support over this ten-year period, accounting for 49% of the entire defence budget.

This was a £46.3 billion (19%) increase compared with the previous year’s plan, which covered the period 2022 to 2032. However, this budget increase was outstripped by a £65.7 billion (27%) rise in forecast costs for planned equipment projects, equating to an overall funding shortfall of £16.9 billion (based on central estimates).

This was the largest deficit between the MOD’s equipment budget and its military capability requirements since the first equipment plan was published in 2012.

Spending on the Defence Nuclear Enterprise (DNE)

Maintaining the nuclear deterrent is the MOD’s highest priority and funding for this was ringfenced in 2023.

In 2024/25, spending on the DNE totalled £10.9 billion. Spending plans set out in the MOD Main Estimate for 2025/26 indicate that this is set to increase to £11.8 billion in cash terms, although these plans may be revised at the Supplementary Estimates towards the end of the financial year.

The latest Defence Equipment Plan was the to first provide a breakdown of the forecast budgets and costs of nuclear and conventional capabilities. Spending on nuclear programmes across the whole plan over the ten years from 2023 to 2033 was forecast at £117.8 billion, of which £109.8 billion had been budgeted for, leaving a £7.9 billion deficit. In June 2025, the government has said that the current forecast for DNE spend over the same period has increased by about £10 billion (to approximately £128 billion).

Defence reform and the new National Armament Director

In October 2024 the Defence Secretary, John Healey, announced his plan for reform to the way UK Defence works. In a press release, the Ministry of Defence described these as the “biggest reform of the Ministry of Defence in over 50 years to fix what the Public Accounts Committee calls the ‘broken’ defence procurement system and to strengthen UK Defence”. He expanded on his proposals in a speech in February 2025, and in a written statement when the reforms came into effect on 1 April 2025.

Central to the new system is the creation of a “fully fledged” National Armaments Director; previously, the National Armaments Director was the head of Defence Equipment and Support (DE&S), the equipment procurement arm of the MOD.

The new director will form part of the new ‘quad’ leadership of Defence, alongside the Permanent Secretary of the Ministry of Defence, the Chief of the Defence Staff, and the Chief of Defence Nuclear.

John Healey said the new armaments director “will fix procurement and drive growth” and will run a single new investment budget, bringing together eight separate procurement budgets across the organisation into one.

The National Armaments Director will head a National Armaments Director Group, which will consist of several existing organisations: Defence Equipment and Support, Defence Digital, the Defence Infrastructure Organisation and Defence Science and Technology Laboratories.

The government is also moving ahead with the integrated procurement model announced by the previous Conservative government in February 2024. This new approach overhauls the way the services are expected to buy new equipment and shortens the timeframe for contracts to be signed; the timeframes vary from two years to contract for major platforms such as tanks and aircraft, to one year for modular upgrades, such as weapons or sensors, and three months for commercially available systems, such as drones or digital software.

The new National Armament Director will also be expected to implement the forthcoming Defence Industrial Strategy. This was expected to have been published in late Spring 2025. However, on 13 June 2025, the Defence Procurement Minister, Maria Eagle, said that the strategy “will be published in the coming months”.