Defence Funding

Baroness Goldie Excerpts

Thursday 16th May 2024 Lords Chamber

Asked by

[Baroness Goldie]

To ask His Majesty’s Government whether they intend to replicate the approach of the Green Savings Bonds to provide incremental resource to fund the defence capability by issuing a defence bond.

[The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)]

My Lords, the Prime Minister recently set out our pledge to increase defence spending to 2.5% of GDP by 2030. That increase starts today, will rise each year and will see defence spending rise to £87 billion a year by 2030-31. This is the biggest strengthening of our defence since the Cold War. The commitment will be fully funded, with no increases in borrowing or debt. Therefore, we have no plans to issue defence bonds.

[Baroness Goldie (Con)]

My Lords, I thank my noble friend for that response. I of course welcome the Prime Minister’s commitment, which is reassuring and provides a clarity that is much needed. My Question is designed to explore innovative ways of augmenting defence spending and thereby assist the Treasury. The Government vigorously promoted green gilts and green investment bonds to fund green expenditure. If that is an acceptable funding principle for the environment, why is it not for our national security?

[Baroness Vere of Norbiton (Con)]

As I have outlined, the Government will use existing resources to fund this increase in defence spending, but my noble friend makes an important point: our superb defence industry needs investment. Although the Government are the main customer of the defence industry, as are exports, these are of course private companies and they do need investment. There are some reports that defence is being excluded on ESG grounds. The Government have confirmed and are absolutely committed to the fact that investment in good, high-quality, well-run defence companies is compatible with ESG considerations.