The Defence Investment Plan Funding explainer
Published 30 June 2026
© Crown copyright 2026
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/the-defence-investment-plan/the-defence-investment-plan-funding-explainer
| £ billion, including Barnett consequentials. Positive numbers = increases in spending; negative numbers = savings or reductions | 2026-27 | 2027-28 | 2028-29 | 2029-30 | Total | |
|---|---|---|---|---|---|---|
| Spending | ||||||
| 1 | Defence Investment Plan | 3.4 | 3.7 | 3.9 | 4.0 | 15.0 |
| 2 | Total increase in Ministry of Defence budget by this Government (1) | 12.5 | 16.1 | 16.7 | 17.3 | 62.6 |
| 3 | Total Ministry of Defence budget | 68.3 | 73.8 | 76.5 | 79.1 | 297.7 |
| 4 | NATO spending as a percentage of Gross Domestic Product | 2.6% | 2.7% | 2.7% | 2.7% | |
| Funding | ||||||
| 5 | Reduce departmental capital budgets by one per cent (2) | -1.0 | -1.0 | -1.0 | -1.0 | -4.0 |
| 6 | Asset sales (2) | 0.0 | -0.3 | -0.3 | -0.5 | -1.1 |
| 7 | Treasury support for ongoing international objectives and more efficient defence procurement (2) | -0.5 | -0.5 | -0.7 | -0.7 | -2.4 |
| 8 | Further Department for Transport savings | -0.1 | -0.2 | -0.2 | -0.3 | -0.8 |
| 9 | Further Department for Energy Security and Net Zero savings | -0.1 | -0.6 | -0.7 | -0.6 | -2.0 |
| 10 | To be funded at Budget 2026 | -1.8 | -1.1 | -1.0 | -0.9 | -4.7 |
| 11 | Total funding package | -3.4 | -3.7 | -3.9 | -4.0 | -15.0 |
(1) Compared to a baseline assumption of Ministry of Defence planned Total Departmental Expenditure Limit in 2024-25, as of Spring Budget 2024, maintained as a share of Gross Domestic Product.
(2) Included within these lines is funding which increases MoD’s spending power by £3.4bn over four years, consisting of £400m of MoD asset sales, £2.4bn of Treasury support for international objectives and procurement, and £600m from MoD reprioritisation.
Explainer
The government has confirmed an additional £15 billion for the Defence Investment Plan between 2026-27 and 2029-30. The government will spend over £60 billion more on defence over the next four years than if spending were maintained in line with plans set out in Spring Budget 2024.
This will move the UK towards warfighting readiness, modernising military capability to fight the wars of the future and drive economic growth. The DIP document sets out investments in defence totalling £298 billion over the next four years.
From 27-28 onwards, the UK will spend 2.7% of GDP on core NATO defence spending, solidifying its position as the NATO Alliance’s third-largest cash spender, behind only the US and Germany. The Government has committed to increasing defence spending to 3% of GDP in the next Parliament, with funding and plans to be set out at the next spending review where defence must be the number one priority. Alongside NATO allies, the UK has committed to reach 3.5% of GDP on defence spending by 2035. UK remains committed to meeting its obligations to the Defence Investment Pledge. All Allies will review the trajectory and spend in 2029, when NATO next reviews its capability plans.
This is more money for UK defence, spent more effectively to ensure our service personnel have the capabilities they need to deter and fight now, whilst driving out waste and inefficiency.
This funding supports £5 billion investment in drones and autonomous systems, the UK’s largest ever investment in drone warfare, and learning the lessons of Ukraine. It will fund strike and surveillance drones, a new hybrid navy as well as uncrewed land vehicles. It will also support the next generation of RAF aircraft, with £8.6 billion investment under the Global Combat Air Programme with Italy and Japan, and £300m for the development of Collaborative Combat Aircraft. It will fund an £11 billion investment for munitions and weapons to increase UK stockpiles, at least six new energetics factories, and £3.2 billion in space capabilities. It will deliver the UK’s renewal of the nuclear deterrent, with £64 billion of investment to build new submarines, develop a sovereign warhead and buy F35A jets.
The Defence Investment Plan will provide long-term certainty over government procurement and innovation priorities, backing British business, and crowding in private investment and supporting high-value jobs and skills across the UK. By aligning defence spending with the Government’s Industrial Strategy, it ensures that every pound invested strengthens national security while driving growth in key sectors, boosting regional economies and positioning the UK at the forefront of advanced manufacturing and technology.
At the same time, additional funding will support improved procurement and productivity, allocating £400 million towards the UK’s contribution to the Multilateral Defence Mechanism, which will enable joint procurement with allies as well as supporting greater spending and our defence industrial base, and a £500 million Transformation Fund to enable transformation of the civilian workforce, reduce dependence on consultancies and deliver productivity improving investments in AI. This is supported by £115 million that the Department for Science, Innovation and Technology will spend to strengthen our defences against the risks of AI and a new £50 billion Defence Export facility to support British defence businesses to compete and create jobs.
Tough choices have been made, but these have been necessary to ensure our capabilities are fit for today and to put defence on a sustainable footing. This includes moving away from ageing traditional capabilities in many areas in favour of more advanced, more effective technology. It also includes driving out waste and inefficiency, with a new commitment to deliver £250m of fraud recovery by 2029-30. There will also be a fundamental reset in MOD’s financial management, with defence decision-makers accountable to the MOD Permanent Secretary on budget management, and annual DIP delivery updates to Parliament each year.
Funding
This package has been funded by reprioritising public spending, acting within our fiscal rules and without taking resources away from day-to-day spending on frontline services. It is funded primarily by reallocating budget from across government departments, with £10.3 billion identified now. A further £4.7 billion over four years will be confirmed at Budget 2026, in a fair and balanced way.
Departments have been asked to contribute 1p in every £1 of their capital budgets from this year. We will ensure that we focus this on finding efficiencies, cancelling or delaying lower priority programmes and remaining ruthlessly focussed on value for money for the taxpayer. Departments will also monetise assets including underused land and builds so that we are securing the maximum value from the £1.9 trillion of assets the government holds. Departments will bring forward details in due course.
As departments with larger capital budgets, the Department for Transport (DfT) and the Department for Energy Security and Net Zero (DESNZ) have been asked to make further contributions.
DfT will provide savings of up to £700m from its roads funding. The Department will consult on reductions to the third Road Investment Strategy (RIS3) - including the potential cancellation of the A38 Derby Junctions and A46 Newark Bypass schemes, both of which are yet to enter contract and not as far along as other road schemes. There will be stakeholder consultations before any final decision is taken.
DfT will also explore limited reductions to as yet uncommitted roads funding. The government remains committed to protecting funding for local authorities to mend potholes and repair their roads, protecting investment in rail infrastructure, including Northern Powerhouse Rail, and the proposals will not impact bus or rail services.
DESNZ will find an additional £2 billion of savings – including £400m Financial Transactions – while maintaining the fastest growing capital budget out of any department across this spending review period. Getting off fossil fuels is vital to our national security, safeguarding household, business and government finances. DESNZ will reshape its capital budget in a way which continues to protect the clean power mission, drive renewable and nuclear build-out and insulate us from future gas price spikes on the path to energy independence. More detailed plans will be shared by Autumn.
A further £3.4 billion spending power has been generated through removing burdens on defence. This unlocks new investment in the DIP. It includes £0.4 billion income from rationalising the MOD estate, and £0.6 billion from reprioritising MOD spending. HMT is also freeing £2.4 billion by taking on responsibility for the cost of further support for ongoing international objectives which includes Ukraine Security Guarantees in case of a ceasefire, and unlocking additional savings from improved procurement. That frees up cash from MOD’s budget which they can invest elsewhere in the DIP. This will bring total additional funding to £15 billion – including £11.6 billion additional cash. This is new investment for the DIP.
We are committed to fiscal sustainability. We are acting within our iron-clad fiscal rules to protect households and businesses from higher inflation and higher interest rates, while readying UK defence against emerging global threats.