Written by Max Hardy, MBDA Secondee.

The amount the UK spends on defence has always been a contentious issue, with many saying that the UK doesn’t spend enough – and others also believing that too much is spent. Although it’s impossible to please everyone, there are ways in which the Ministry of Defence’s spending, whatever the level, can be made to work better for the whole of the UK.

The MOD recently released a paper detailing their spending; revealing that in the year 2017/18 defence spending amounted to £36.9 billion – a real terms increase of £0.7 billion from the previous year. Also, from 2019/20 spending is planned to be further increased by £1 billion compared to 2016/17.

Relatively, this represents a lot of spending power (around 2% of UK GDP), and commitments made by the Chancellor in his most recent Autumn Budget increased this further. However by looking at the past, it’s clear to see that defence spending has continually decreased in terms of the share of government spending – from around 7% of GDP in the 1950’s.

What also needs to be considered is how defence spending is calculated – and what is actually included in the figure. Unlike what may be perceived, defence spending is not the amount spent on procuring defence equipment such as combat aircraft or warships. The NATO definition in fact includes expenditure on a range of areas such as payroll, pensions and even financial assistance to allies.

Since 2016 the MOD have included spend such as war and civilian pensions and UN peacekeeping contributions – thought to have been introduced to ensure NATO’s target of spending 2% of GDP on defence is met. For example, if pensions were taken out of the 2017/18 defence spend it would only account for 1.97% of GDP.

That aside, over 34% of defence spending, or almost £12.5billion, is still spent on the procurement and support of defence equipment by the MOD. This begs the question as to what more could be done to make the most of this spending power to better the UK and its economy as a whole. So even if the budget has decreased over time, as mentioned above, it can be used to work harder.

The Prosperity Review, conducted by Philip Dunne, looked into how defence spending creates prosperity in the UK and made several suggestions as to how it could contribute even more. One such suggestion was that prosperity should be taken into consideration when deciding on procurement contracts. For example, there may in fact be a net benefit to placing a contract with a UK supplier rather than buying off-the-shelf from an overseas supplier – even if it initially costs more to do so.

By factoring in prosperity – such as increased jobs and training, opportunity for UK exports and increased industrial productivity – UK defence spending can be used to greater benefit the wider economy and the many local economies that have a part in the UK’s world leading defence industry.