Autumn Budget 2025

Lord Craig of Radley Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Craig of Radley (CB)]

My Lords, the Prime Minister made strong welcome statements to NATO allies about the UK’s commitment to defence at the summit in The Hague on 24 June. He pledged the United Kingdom to increase spending on defence and wider security to 5% of GDP by 2035, with a projected split of 3.5% for core defence and 1.5% for resilience and security. He also indicated that by 2027 the UK expects to reach 4.1% of GDP on defence and security combined. This was presented as an historic commitment, aligning national security with economic security, and signalling Britain’s determination to remain a credible and capable partner in NATO.

However, when we turn to the Treasury’s position, as expressed by Ministers in recent Statements and in the Budget, the difference in tone is striking. The noble Lord, Lord Livermore, has been all too clear. In March this year he said at the Dispatch Box,

“our fiscal rules are non-negotiable”.—[Official Report, 27/3/25; col. 1824.]

He said that decisions on major spending, including defence, would be taken in the usual way, guided by forecasts and fiscal rules. Again, in July he stated:

“The Chancellor will ask the OBR to produce a new forecast in the autumn before the annual Budget and will take decisions based on that forecast”.—[Official Report, 10/7/25; col. 1461.]


The Chancellor’s Budget Statement is largely silent on defence and security. Yes, a conditional “set to spend” 2.6% of GDP by April 2027 is floated. Is this the same as the Prime Minister’s 4.1% of GDP on defence and security combined by 2027? It is hard to tell.

Much of this money has been found at the expense of overseas aid—soft power raided to pay for hard power. There is no mention by the Chancellor of the intention to reach 3%, let alone 3.5%, of GDP in the next decade. Defence does get a mention in spending to buy, make and sell more defence products and to support newbie Team Derby. This is putting the cart before the horse. Surely the Chancellor should speak in terms of the need for stronger defences in today’s world. This should have a firmer place in important government statements of national fiscal priorities. Indeed, did the Minister once touch on national defence just now? If he did, I am afraid I missed it.

The nation should be reminded of the urgent need to start paying more to enhance our conventional forces. Credibility rests on not just words but firm resources being allocated. Armed forces cannot be built up overnight. Long-term planning and certainties are necessary. If Treasury Ministers signal hesitation, or, worse, indifference, while our Prime Minister signals resolve, that sends a mixed message to allies, to those who challenge us and to our Armed Forces themselves. To treat defence as a residual claim on the public purse is to invert the priorities that safeguard our national interests. Will the Treasury now share the Prime Minister’s strategic vision? Will the Treasury accept that increasing defence expenditure for the next decade must be planned and signalled now, not judged later by the elegance of some inflexible fiscal rules or by changeable, maybe dodgy, forecasts?