Recommendation 2

Because of the repeated delays to the publication of the Integrated Review of Security, Defence, Development and Foreign Policy, the Department was not able to provide details of how it proposes to use the £16.5 billion additional defence funding, or what capabilities it will cut to develop a balanced investment programme. In November 2020, the government announced additional defence funding of £16.5 billion over the next four years. The Department’s planning assumption that its budget will grow in real terms by 0.5% per year for the subsequent six years and, as a consequence, it estimated that the Spending Review settlement would result in an extra £30 billion over the next 10 years. This settlement provides—for the first time in many years—a crucial opportunity to tackle the longstanding unaffordability of the equipment programme. As the 2020–2030 Plan is not affordable, the Department needs to make tough choices to reduce the existing funding shortfalls, including disinvestment in capabilities that it decides it no longer needs. The Department also plans to develop new capabilities and establish a new Space Command, but was not clear what level of funding would be available for these initiatives. As ministers had not yet made final decisions, the Department could not provide us with details of how the £16.5 billion would be used, including how much would be allocated to the Equipment Plan or other areas of Defence expenditure. It referred to the forthcoming publication of the Integrated Review, although it could only confirm that this would appear in the ‘spring’. 6 Defence Equipment Plan 2020–2030 Recommendation: Within three months of the Integrated Review being published, the Department should provide full transparency on its allocation of the additional funding, including: full details of disinvestment decisions; how the funding has been used to address existing shortfalls; and the investment in new capabilities.