Labour's Defence Investment Plan: £300bn and 2.7% of GDP
The government's plan to raise UK defence spending to almost £80 billion a year by 2029 — what's in it, how it's paid for, and roughly how it maps onto the tax you pay.
What's being proposed
On 30 June 2026, Prime Minister Keir Starmer launched the Defence Investment Plan (DIP), setting out £298 billion of defence investment over the four years to 2029–30 — including an extra £15 billion on top of last year's Spending Review. Annual defence spending would rise from £54 billion in 2024 to almost £80 billion a year by 2029. In GDP terms that lifts spending from 2.3% (2024) to 2.7% from 2027–28, with a stated aim of reaching 3% in the next Parliament and NATO's 3.5% by 2035.
Where it comes from
The DIP is the long-delayed follow-up to the 2025 Strategic Defence Review, arriving around a year late and days before a NATO summit. It lands amid political turmoil: Starmer is expected to leave office in July 2026 after losing the support of Labour MPs, and two defence ministers — including the former Defence Secretary — resigned this month, arguing the planned spending was too low.
What's in the plan
- Over £5 billion for drones and autonomous systems — the UK's largest-ever investment in the technology.
- £64 billion to renew the nuclear deterrent (new submarines, a sovereign warhead, 12 F-35A jets).
- £11 billion on munitions, with at least six new energetics factories by 2030.
- £8.6 billion for the GCAP next-generation fighter with Japan and Italy.
- A new £50 billion Defence Export facility via UK Export Finance to back British defence firms.
How it's paid for
The Treasury says the package sits within its fiscal rules and protects day-to-day frontline spending. The money comes from reprioritising across government — departments contributing 1p in every £1 of their capital budgets, monetising underused land and assets, and delaying or cancelling some road and energy projects. Of the £15 billion, £10.3 billion is identified now, with a further £4.7 billion to be confirmed at Budget 2026.
The case for and against
The government argues
- It responds to a genuinely more dangerous world, including the threat from Russia.
- It's the largest sustained increase in defence spending since the 1980s, and keeps the UK on track for NATO targets.
- It backs British industry, jobs and exports — without raising taxes or cutting frontline services.
Critics argue
- The Chief of the Defence Staff reportedly said £28 billion was needed over four years — the plan funds around half.
- Opposition MPs call it "300 days late" and billions short of NATO commitments; a former Defence Secretary says it risks making Britain "less safe".
- Much of the new kit (drones, aircraft) mainly enters service in the 2030s, and the plan is part-funded by cutting road and energy investment.
Where does your tax fit in?
Defence is paid for out of general taxation — there's no separate "defence bill". This tool apportions defence's share of total public spending to the income tax and National Insurance you personally pay, to show roughly how that slice changes as spending rises from 2.5% to 2.7% of GDP.
Your income
Defence spending path from the Defence Investment Plan (2.3% of GDP in 2024, 2.7% from 2027–28, 3% aim next Parliament). Your income tax and employee National Insurance are modelled on 2025/26 rates for England, Wales & NI. Total Managed Expenditure is taken as roughly 44.7% of GDP for the apportionment. Figures are illustrative. Not financial advice.
Sources & further reading
- GOV.UK — PM speech announcing the Defence Investment Plan (30 June 2026).
- GOV.UK — Defence Investment Plan funding explainer.
- Hansard — Commons debate on the Defence Investment Plan.
Figures are the government's own and are contested by opposition parties and some analysts. Not financial advice.