DEFENCE SPENDING

Britain has committed in meeting the NATO target of spending 2 per cent of national income on defence, the Chancellor announced in the Budget.

Military chiefs applauded the decision although there are fears of ‘creative accounting’ – because intelligence spending could be included in the figures.

The Commons foreign affairs committee chairman, Crispin Blunt, said: ‘The pledge to meet the NATO target of 2 per cent of GDP on defence is not quite as profound as it appears.

‘The Government is apparently changing the way they measure defence spending to meet this important target by including expenditure outside the MoD budget, including £2.5 billion on the secret intelligence agencies.’

The pledge will likely be welcomed both by NATO and the US, who have both voiced concerns about the importance of meeting this target.

Whilst welcoming the announcement Admiral Lord West warned: ‘If this is creative accounting I would be very disappointed.’

George Osborne said the Government would spend 2 per cent of GDP on the military every year of this decade and raise the defence budget by 0.5 per cent a year in real terms. Until now, ministers had not committed to spending at that level beyond the current financial year – prompting pressure from backbench MPs and military chiefs.

Mr Osborne said: ‘The Prime Minister and I are not prepared to see the threats we face to both our country and our values go unchallenged.

‘Britain has always been resolute in defence of liberty and the promotion of stability around the world. And with this government it will always remain so.’

The Chancellor announced a new fund, worth up to £1.5billion a year, which will be spent on intelligence items such as cyber security.

Recent figures released by NATO revealed that Britain is line to spend 2.1 per cent of national income on defence this year. But this includes all of the £1billion cross-departmental fund known as the Conflict Pool, which is used to support fragile and war-torn states rather than military operations.

The UK is just one of four of NATO’s 28 member states who currently meet the 2% target and last month the U.S. called for billions more to be spent citing the situation in the Balkans. ‘I think it’s clearly the view at NATO that the Ukraine situation has been a game-changer,’ said Robert Bell, the U.S. secretary of defence representative in Europe.

NATO announced in June that it would be ‘naming and shaming’ the Western European countries which failed to spend more than 2% of their gross domestic product on defence, at the same time that US President Barack Obama expressed his concerns at the G7 summit that UK spending would fall.

The 2015 Strategic Defence and Security Review which is taking place this year will review the threats facing Britain and its ability to tackle them. Writing in a British newspaper last month, defence secretary Michael Fallon said that the review will ‘be positive and assertive about Britain’s place in the world: ready, willing and able to act to defend our values as we always have done.’