CONSERVATIVE
New Forest East

SPECIAL REPORT [20th] 2017–19: 'SHIFTING THE GOALPOSTS? DEFENCE EXPENDITURE AND THE 2% PLEDGE – AN UPDATE' (HC 2527)

Defence spending continues to decline

Defence Committee Press Notice – 16 July 2019

The Defence Committee has today published updates to its analysis of governmental expenditure that appeared in its 2016 Report Shifting the goalposts? Defence expenditure and the 2% pledge.

The updated graphs and tables, which compare UK expenditure on Defence, Health, Education, Pensions and Benefits and Overseas Development Assistance, show that core Defence spending has continued to decline as a proportion of GDP from more than 7% in 1955-56 to less than 2% in 2017-18.

Since 2010-11, the Ministry of Defence's expenditure as a percentage of GDP has decreased by a larger proportion than the reductions in Health, Education, and Pensions and Benefits expenditure, while spending on Overseas Development Assistance has continued to increase.

Commenting on the Special Report, the Chairman of the Defence Committee, the Rt Hon Dr Julian Lewis MP, said:

"We at the Committee are disappointed that Defence spending continues to bear a disproportionate burden arising from reduced Government spending.

"While the UK continues to meet its NATO commitment to spend 2% of GDP on defence, this is only because in recent years it has included several items of expenditure which it had not counted previously, such as pensions and contributions to UN Peacekeeping Missions.

"On a like-for-like basis, in 2017-18 Ministry of Defence spending was equivalent to just 1.8% of GDP, compared with around 6% in the 1960s, 4.5% in the 1980s and 3% even in the mid-1990s — several years after the end of the Cold War."

[To read the full report, click here.]

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REPORT SUMMARY

In 2016, our predecessor Committee published Shifting the goalposts? Defence expenditure and the 2% pledge.1 That Report analysed the Government’s commitment to spend 2% of GDP on Defence until the end of the Parliament. The Annexes provided graphs and tables comparing UK expenditure on Defence, Health, Education, Pensions and Benefits and Overseas Development Assistance, as a proportion of GDP, from 1955-56 to 2013-14.

This analysis showed that, between the end of the Cold War at the end of the 1980s and 2013-14, expenditure on Health had almost doubled as a proportion of GDP. Since the end of the 1990s, expenditure on Overseas Development Assistance had more than doubled. Between 1955 and 1975, expenditure on Education also doubled, after which it had remained approximately constant at this enhanced level. By contrast, between 1988 and 2014, Defence expenditure had almost halved as a proportion of GDP.

This Special Report updates the graphs and tables to 2017-18.2 Since 2010-11, spending as a percentage of GDP has fallen in most of the areas analysed. Expenditure by the Ministry of Defence has reduced by 0.6 percentage points from 2.4% of GDP in 2010-11 to 1.8% in 2017-18 (a proportionate decrease of 25.1%). The UK’s overall Defence expenditure, as defined by NATO, has fallen by 0.4 percentage points from 2.5% of GDP in 2010-11 to 2.1% in 2017-18 (a proportionate decrease of 16.0%).3

Between 2010-11 and 2017-18, the Ministry of Defence’s expenditure as a percentage of GDP decreased by a larger proportion (25.1%) than the reductions in Health, Pensions and Benefits and Education expenditure over the same period. Spending on Overseas Development Assistance has continued to increase.4

NOTES

1. House of Commons Defence Committee, Shifting the goalposts? Defence expenditure and the 2% pledge, Second Report of Session 2015-16, HC 494, April 2016

2. In updating the data, we have used the Office for National Statistics’ YBHA Series for Gross Domestic Product released on 28 June 2019 to calculate the percentage. As these estimates have been revised since the previous Report, the figures may differ slightly from those we reported previously. All percentages have been rounded to one decimal place.

3. We have updated our analysis to include the NATO defence expenditure definition. NATO’s definition of Defence expenditure is established ‘as payments made by a national government specifically to meet the needs of its armed forces or those of Allies’. Expenditure is counted as being Defence expenditure if it falls within one or more of seven areas: expenditure on the Armed Forces and “Other forces”; pensions; peacekeeping, humanitarian and weapon control; research and development; the military component of mixed civilian-military activities; financial assistance to an ally; and expenditure towards NATO common infrastructure. See House of Commons Library Briefing Paper, UK Defence Expenditure, CBP 8175, November 2018

4. Between 2010-11 and 2017-18: Education expenditure as a percentage of GDP fell by 1.3 percentage points from 5.5% of GDP to 4.2% (a proportionate decrease of 24.7%); Pensions and Benefits expenditure as a percentage of GDP fell by 2.1 percentage points from 13.2% of GDP to 11.1% (a proportionate decrease of 16.1%); and Health expenditure as a percentage of GDP fell by 0.5 percentage points from 7.6% of GDP to 7.1% (a proportionate decrease of 5.8%). Over the same period, spending on Overseas Development Assistance as a percentage of GDP increased by 0.2 percentage points from 0.5% of GDP to 0.7% (a proportionate increase of 26.5%).