The UK’s Defence Investment Plan and what it proposes

Instead of focusing on issues that matter, geopolitics is currently diverted to resolving major conflicts, where any hope of agreement is frustrated by personal and national resistance to any compromise.

The long-awaited Defence Investment Plan (DIP) was published on 30 June 2026, shortly after John Healey, UK Defence Secretary, and Al Carns, UK Armed Forces Minister, resigned on an unprecedented matter of principle that it fell short of what is required to transform UK forces to face rising challenges to world security.

Simultaneously, growing dissatisfaction with Keir Starmer resulted in a change of Prime Minister to Andy Burnham, former Mayor of Greater Manchester. While Starmer has shown leadership on the global stage by forming the “coalition of the willing” in partnership with Macron, he has maintained his “red lines” on applying to rejoin the EU, as promoted by the Liberal Democrats.

Will Burnham do better? It is now clear that most voters, including those too young to vote in 2016, are now in favour of rejoining. This is the single action most likely to reduce the 6 to 8% loss in GDP caused by Brexit and plug the hole in defence expenditure in the Defence Investment Plan (DIP). It will resolve the issues of the Northern Ireland Protocol and the Scottish National Party’s desire for independence more than devolving power to the regions. For Burnham, this is a bigger challenge than getting a more efficient bus service in Manchester.

Defence Industrial Plan shortcomings

The DIP intended to show how the UK Strategic Defence Review would be financed. In the SDR, costs of the intelligence services (MI5 and MI6) were moved to the defence budget for the first time. This is not new money but lifted the budget from 2.5% to 2.6% of GDP as a starting point.

The DIP increased this to 2.7% from 27/28 to 29/30 by adding an extra £15Bn over four years, giving a total MoD budget of £297.7Bn over those four years. However, only £10.3Bn of the extra £15Bn has been found by reductions in other departmental budgets, asset sales, more efficient defence procurement, energy savings and cancellation of two road build projects. The remaining £4.7Bn will be identified in the 2026 budget.

The government committed to achieving 3% GDP in the next parliament and 3.5% by 2035. NATO has since increased this goal to 5% by 2035. Where this comes from is not yet clear. The absence of a viable plan to meet this goal and current turmoil in UK politics did not place Starmer in a strong position at the NATO Summit in Ankara on 7 to 9 July.

Trump’s presence was a dark shadow over the summit, with concerns that he would distract the discussions with a few of his well-worn vocal grenades. Mark Rutte, NATO Secretary General, acting in his self-appointed role as the “Trump Whisperer,” could not prevent Trump’s oft-stated complaints against certain NATO members, mention of Greenland and further provocations preventing any resolution of his war with Iran.

How well does the DIP meet the NATO Summit aspirations?

Maritime capability

The Strategic Defence Review said, “up to 12 SSN-AUKUS submarines will be built to replace the Astute class for the joint programme with the US and Australia”. This is conditional on productivity improvements at BAE’s Barrow-in-Furness facility to ensure one submarine is completed every 18 months. First construction is scheduled for 2027. This programme builds on the shared US/UK experience of building nuclear-powered submarines and transferring the technology to Australia that supports US interests in the Indo-Pacific.

Barrow is also building four Dreadnought ballistic missile submarines to upgrade the UK nuclear deterrent force. £20Bn is allocated to upgrade the UK nuclear deterrent and commence design of Dreadnought. SDR statement on the purchase of 12 F35A fighters has been clarified to say they will be used for training purposes and not add a UK airborne deterrent.

Future shipbuilding in the UK faces a double challenge. Firstly, the future surface fleet will be a combination of crewed and unmanned vessels. Secondly, it must manage the UK and especially Scottish shipbuilding facilities to meet NATO’s operational needs, while also aligning deliveries of new ships. Not only this, but also retiring older vessels and optimising the use of the workforce across the different facilities to achieve conflicting goals.

The SDR provided for eight new Type 26 ASW frigates. Additionally, Norway has placed a £10Bn order for at least five Type 26 to be built at BAE Systems on the Clyde, with deliveries starting in 2030. This strategic partnership allows UK and Norwegian navies to operate a joint task force in future, while maintaining work on the Clyde for 15 years. The partnership is also part of a Global Combat Ship User Group that includes plans for replacement Canadian and Australian frigates with a common design, but different sensors and weapon systems. This may provide a group of up to 34 ships available to support Carrier Strike Groups.

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The SDR also provided for five new Type 31 general purpose Inspiration class frigates to replace 13 Type 23’s. The keels of the first two ships, HMS Venturer and HMS Active, were laid in 2022 and 2023 and are due for delivery from 2028. They will have a bay at sea level that can be opened to launch small crewed or uncrewed boats, be able to operate Merlin or Wildcat helicopters, and have a variety of missile weapon systems.

There is a possibility of competitive orders from Denmark and Sweden. Denmark wants a wider competition, including Germany, France and Spain, with Danish industry supplying some systems and, in the longer term, assistance in some ship assembly in Denmark. This greater cooperation between European defence industries can be a small step towards a long-term option of European defence and security forces.

The DIP commits to six Common Combat Vessels as the Royal Navy’s first hybrid warships to follow on from Type 31 frigate construction and align with the replacement of Type 45 destroyers from the mid 30’s. Their retirement will contribute £1.38Bn to production of the hybrid fleet. They will coordinate air, surface and underwater systems. A procurement decision for these vessels has not yet been made.

At the NATO Summit in Ankara 7 and 8 July, a £2.4Bn contract was signed for the UK to build all eight Anglo-Dutch assault ships in a planned Anglo-Dutch amphibious fleet, with four ships for each Navy. This serves as a further example of European nations working together to provide increased operational capability for NATO.

Airborne capability

There is good news for the UK, Japan, and Italy. The joint Global Combat Air Programme (GCAP), for the next generation of fighter aircraft, has been awarded £4.6Bn for the completion of a concept and initial design phase, starting July 2026. This is part of the £8.6Bn for the project identified in the DIP. As the competing FCAS programme was cancelled, Germany may also join GCAP, and Canada has joined as an observer nation. Initial introduction to service is envisaged in 2035, so fifth generation fighters (F35) must be maintained until then.

£5.4Bn is allotted to maintain and upgrade 107 Typhoon fighters to continue quick reaction alert, air defence and NATO air policing into the 2040’s, when GCAP becomes operational. Upgrades include an electronically scanned, multi-target tracking radar, defensive aids suite, improved communications, and software updates.

The initial air defence capability of GCAP fighters will be enhanced during the 2030’s by controlling new, unmanned drone fighters. £300M has been allocated to produce a flying concept demonstrator by 2030.

RAF Jet training has been a problem since BAE persuaded the Ministry of Defence to buy the Hawk Mk2 for training, while retaining the Mk1 for the Red Arrows display team. £360M is allocated to replace Mk1 and 2, but aircraft type, dates, and numbers have yet to be decided.

At the NATO Summit, ten European nations (plus Canada) agreed to buy the Swedish Saab GlobalEye aircraft as NATO’s next Airborne Warning and Control System (AWACS). This is another move away from reliance on American military products. The RN has a long-standing shortfall of no organic Airborne Early Warning (AEW) capability on its aircraft carriers. To avoid removing the ski jump and fitting an electro-mechanical aircraft launch and arrest system, a market study of potential large drones was conducted in 2025 to replace the limited capability Merlin helicopter Crowsnest variant. Procurement options, yet to be identified, may include a modified Protector RG Mk1 drone to fulfil the requirement similar to the MQ-9 Reaper.

Land Capability

In the first four years, UK land forces will start a Recce-Strike transformation to become more lethal in modern warfare by combining survivable crewed systems with reusable recce drones and one-way strike drones.

Recce Strike was first announced in 2023 but has been modified to take account of experience in Ukraine. This includes procurement of Ajax and Boxer armoured fighting vehicles, Challenger 3 main battle tanks, drones to work with Apache attack helicopters, and a new medium helicopter. Also, replenishment of used weapons and missiles. Total cost sits at around £13.4Bn, and a further £36Bn is allocated for 2030 to 2035.

Commentary

Throughout this article, I have noted the main military capabilities that we will see emerging in the next four years. The DIP is vast, including plans to modernise UK military accommodation and research on new weapons, such as directed energy weapons. It is difficult to accurately cost their acquisition and support in future years.

To cater for a radical transformation in providing the capability needed to conduct modern warfare, we need major changes in our defence and security industrial base. This takes time, but is beginning to happen, and will result in less dependence on supply by American companies as a direct consequence of Trump’s policies on NATO and trading.

To deliver the equipment our Armed Forces need, Mark Carney, Prime Minister of Canada, advocated a new solution for financing defence expenditure at the NATO Summit. When I worked in NATO, everything was costed in International Accounting Units. This is not ‘real money’ and, effectively, controlled by the USA. Carney’s solution is the Defence, Security and Resilience Bank to be established in Ottawa, not the USA.

Labour MP Will Stone urged the Treasury to back this initiative, and Alex Baker, MP for Aldershot and Defence Select Committee member, wrote this report that sparked wide debate. Will new Chancellor John Healey honour Labour’s promise to fund the DIP financial gap without incurring other politically painful cuts?

Credits: I refer to the UK Defence Journal run by George Allison. George was a Bylines Scotland author with wide knowledge of the Scottish shipbuilding industry. He left to form the Journal with a team who publish daily on all matters of UK defence.