FTI Consulting UK Public Affairs Snapshot – The Defence Investment Plan – ‘A DIP into the unknown’

Autumn 2025. That was supposed to be the date when the Defence Investment Plan (DIP) would detail how the Ministry of Defence planned to spend its biggest budget since the Cold War — the final piece of the jigsaw for a triumphant Strategic Defence Review that would reverse a generation of decline in the UK’s armed forces.

More than 12 months on from its announcement, and at the cost of a Defence Secretary’s job — and, arguably, that of the Prime Minister himself — the DIP has finally seen the light of day. The path has been as noisy as it has been unedifying. At its heart a question that has dogged the process: whether national security is too vital to fit within a Treasury envelope, or whether the MOD should simply cut its cloth like every other department in Whitehall.

£15bn in new money and a trajectory towards 2.7% of GDP was supposed to settle that argument and provide certainty to the armed forces and industry. Yet Keir Starmer heads into NATO’s annual summit next week with questions still hanging over the settlement — not least whether his successor in Downing Street will abide by it.

Andy Burnham — on an unstoppable trajectory to No.10 — has promised to take his responsibilities to fund the DIP “extremely seriously”. But that welcome appears to be less endorsement than accommodation, inheritance of a framework that offers closure on a politically difficult argument he is not inclined to reopen.

Of course, inheritance is not resolution and the settlement is less secure than it looks. Although MOD has accepted a lower budget than it wanted, the Treasury has not fully resolved the gap. Something like £4.7bn of commitments have been left for Burnham’s incoming Chancellor to fund. It will crystalise in the first Burnham budget – perhaps just months away – an immediate test not just of the DIP, but the new Government’s wider fiscal credibility.

At that point the choices are narrow. Raising taxes early faces accusations of breaking electoral promises before authority is established. Sweeping welfare cuts would provoke resistance across a potentially fragile coalition of ministers. Borrowing, even if set within the context of “Manchesterism”, would raise questions early on about fiscal credibility.

And none of these resolve the underlying issue – they simply decide where the pressure lands. The DIP has not removed uncertainty; it has displaced it into the inbox of the next Prime Minister who will have to own ambitions to reach 3% of GDP in the next Parliament and 3.5% by 2035 without a fully costed route to get there.

However much Burnham insists that there will be “no compromise on the security of the nation”, for industry, the devil is in the detail. Much of the DIP’s implementation is still to be determined – procurement timetables, programme priorities and the application of industrial strategy. That provides the next administration with room for manoeuvre.

Moreover, given the extent to which complex defence procurement programmes have historically been prone subject to schedule slippage, cost growth, and evolving requirements, the Plan will inevitably evolve over time – a changing set of priorities, each determined by politics as much as policy.

Which leads to an obvious question. Is Burnham inclined to favour defence in such straightened times? His political priorities sound overwhelmingly domestic, centred on economic management, regional investment and public service reform. He wouldn’t be the first Prime Minister to only appreciate the true magnitude of keeping the nation safe once they have arrived in No.10. But that is little guarantee.

That is the context that, in his final act on the international stage, Keir Starmer will head into the NATO summit next week. Alliance members will not judge the UK on intent, but on credibility. The meeting in Ankara becomes the first external test of whether the UK’s defence trajectory is believed by allies, even while the man to deliver it will not be in the room.

The backdrop is already difficult. A leaked NATO assessment reportedly placed the UK 31st out of 32 members on progress towards capability targets. Even if the methodology is imperfect, the perception is damaging: Britain still talks like a leading defence power but is increasingly measured against weaker delivery.

NATO Secretary-General Mark Rutte has called the DIP a “good step”, but that reflects encouragement rather than confidence. The decisive judgement will come from Washington and European capitals, where credibility is measured in output, not ambition.

This is where domestic politics and alliance expectations converge. The DIP was meant to stabilise Britain’s defence posture, but instead has exposed how fragile that stability remains.

It does so in part because it rests on assumptions that have historically proven difficult to sustain. A significant portion of the settlement depends on “efficiency savings” across the MOD and wider government  something notoriously difficult to realise in practice.

For Starmer, the question is whether the Plan is enough to sustain authority at the summit. For Burnham, it is whether he can comply with its constraints without being defined by them. For NATO allies, it is whether the UK remains a reliable defence partner or a state still bridging ambition and capacity.

Industry will have to come to terms with that uncertainty as they are asked to expand production and invest ahead of demand under procurement reform. But long-term capital decisions depend on predictable funding. Without it, investment slows and capacity growth stalls.

The Defence Investment Plan was meant to close the gap between ambition and delivery. Instead, it has made the gap more visible. Less DIP, more lucky dip.