Asked by: Lord De Mauley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what consideration they have given to using war bonds to fund defence and the impact on public debt.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
War bonds are not being considered by the government. The Defence Investment Plan, which places defence on a stronger, more sustainable footing, is being funded by reprioritising public spending, with £10.3 billion already identified and a further £4.7 billion to be confirmed at Budget 2026 in a fair and balanced way.
The Government is clear that our core gilt programme is the most stable and cost-effective way of raising finance to fund the day-to-day activities of the government, owing to the depth and liquidity of the market. Finance raised via gilts or National Savings and Investments products is generally not tied to specific areas of government spending, in order to offer the best value-for-money for taxpayers. Issuing bonds aimed at specific areas of spending risks fragmenting the gilt market, which would not be consistent with the government’s debt management objective of minimising the cost of long-term financing.
The Government remains open to the introduction of new debt instruments; however, HM Treasury and the UK Debt Management Office apply certain criteria when considering the launch of a new type of debt instrument. These include consistency with the Government’s debt management objective (to minimise the long-term cost of financing, taking into account risk); the impact on the general functioning of the gilt market; the expected size, sustainability, and nature of investor demand for the instrument; and an assessment of the cost and resource commitment required for its introduction into the market.
The Government would also need to be satisfied that any new instrument would meet value-for-money criteria, enjoy strong and sustained demand in the long term, and be consistent with wider fiscal objectives. We keep the introduction of new debt financing instruments under regular review.
Asked by: Lord De Mauley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of whether (1) joining the Defence, Security and Resilience Bank, (2) joining the Security Action for Europe scheme, or (3) forming the Multilateral Defence Mechanism, would have an impact on (a) borrowing, (b) public sector debt, or (c) public sector debt net financial liabilities.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
The MDM and DSRB are initiatives with a shared recognition that allies must work together to strengthen defence capability, industrial capacity and collective security. As is standard under public spending rules, paid-in capital for international institutions, such as Multilateral Defence Mechanism (MDM) and Defence, Security and Resilience Bank (DSRB) will score as financial transactions and should therefore have a neutral impact on UK public sector net financial liabilities (PSNFL). Any borrowing from them would be recognized as government expenditure.
At Ankara in July, UK Prime Minister Starmer and Prime Minister Carney of Canada issued a joint statement on defence financing. This noted that the efforts of the countries supporting the DSRB and the MDM have a high degree of complementarity,and, taken together can serve to improve defence investment throughout the supply chain.
Asked by: Lord De Mauley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what progress they have made towards forming the Multilateral Defence Mechanism to fund defence
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
As a part of the Defence Investment Plan (DIP) discussions, the government committed £400 million towards the UK’s contribution to the Multilateral Defence Mechanism (MDM).
On 6 July, the United Kingdom, Netherlands, Finland and Poland issued a joint statement to reiterate their commitment to strengthen defence financing and improve the cost efficiency of defence spending acknowledging the significant progress achieved to develop MDM.
At Ankara in July, UK Prime Minister Starmer and Prime Minister Carney of Canada issued a joint statement on defence financing. This noted that the efforts of the countries supporting the Defence, Security and Resilience Bank (DSRB) and the MDM have a high degree of complementarity and taken together can serve to improve defence investment throughout the supply chain.
Asked by: Lord De Mauley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the relative benefits of joining the Defence, Security and Resilience Bank as opposed to the Security Action for Europe scheme.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
The MDM and DSRB are initiatives with a shared recognition that allies must work together to strengthen defence capability, industrial capacity and collective security. As is standard under public spending rules, paid-in capital for international institutions, such as Multilateral Defence Mechanism (MDM) and Defence, Security and Resilience Bank (DSRB) will score as financial transactions and should therefore have a neutral impact on UK public sector net financial liabilities (PSNFL). Any borrowing from them would be recognized as government expenditure.
At Ankara in July, UK Prime Minister Starmer and Prime Minister Carney of Canada issued a joint statement on defence financing. This noted that the efforts of the countries supporting the DSRB and the MDM have a high degree of complementarity,and, taken together can serve to improve defence investment throughout the supply chain.
Asked by: Lord De Mauley (Conservative - Life peer)
Question to the HM Treasury:
To ask His Majesty's Government what assessment they have made of the benefits of joining the Defence, Security and Resilience Bank.
Answered by Lord Pitt-Watson - Parliamentary Secretary (HM Treasury)
The MDM and DSRB are initiatives with a shared recognition that allies must work together to strengthen defence capability, industrial capacity and collective security. As is standard under public spending rules, paid-in capital for international institutions, such as Multilateral Defence Mechanism (MDM) and Defence, Security and Resilience Bank (DSRB) will score as financial transactions and should therefore have a neutral impact on UK public sector net financial liabilities (PSNFL). Any borrowing from them would be recognized as government expenditure.
At Ankara in July, UK Prime Minister Starmer and Prime Minister Carney of Canada issued a joint statement on defence financing. This noted that the efforts of the countries supporting the DSRB and the MDM have a high degree of complementarity,and, taken together can serve to improve defence investment throughout the supply chain.