Chancellor to announce defence spending boost as Scotland Secretary says no cut to Scottish budget

Chancellor Rachel Reeves will deliver her statement at lunchtime on Wednesday

The Chancellor is set to unveil an extra £2.2 billion funding boost for defence in her Spring Statement, paid for by cuts to the international aid budget.

In a financial update that could define Scottish Labour’s prospects in Holyrood, Rachel Reeves will promise to bring about “security and national renewal”, by putting advanced weaponry in the hands of British troops, providing better homes for military families and kickstarting economic growth.

Her address is also expected to include more detail on planned welfare cuts, something the Scotland Secretary Ian Murray told MPs on Tuesday would have no impact on the Scottish Budget “in the current spending round”.

Speaking in the House of Commons on Wednesday, Ms Reeves is expected to say: “This government was elected to change our country.

“To provide security for working people. And deliver a decade of national renewal.

“That work of change began in July – and I am proud of what we have delivered in just nine months.

“Restoring stability to our public finances; giving the Bank of England the foundation to cut interest rates three times since the General Election; rebuilding our public services with record investment in our NHS and bringing down waiting lists for 5 months in a row; and increasing the National Living Wage to give 3 million people a pay rise from next week.

She will add: “In February, the Prime Minister set out the government’s commitment to increase spending on defence to 2.5 per cent of GDP from April 2027 and an ambition to spend 3 per cent of GDP on defence in the next parliament as economic and fiscal conditions allow.

“That was the right decision in a more insecure world, putting an extra £6.4bn into the defence budget by 2027.

“But we have to move quickly in a changing world. And that starts with investment.

“So I can today confirm that I will provide an additional £2.2bn for the Ministry of Defence next year - a further downpayment on our plans to deliver 2.5 per cent of GDP.

“This increase in investment is not just about increasing our national security but increasing our economic security, too.

“As defence spending rises, I want the whole country to feel the benefits.”

The boost to defence funding is expected to be invested in advanced technologies for modern warfare, and includes guaranteeing the investment to fit Royal Navy ships with Directed Energy Weapons by 2027. These weapons can hit a £1 coin from 1km away and take down drones at a distance of 5km.

It will also be used to fund better homes for military families by refurbishing the defence estate including more than 36,000 homes recently brought back into public ownership from the rental sector. In addition to this, the funding will unlock rapid preparatory work, such as site surveys, planning and architecture, for the major redevelopment of Armed Forces housing through the Defence Housing Strategy.

Ms Reeves will also tell MPs her job is to “secure Britain’s future in a world that is changing before our eyes”.

She will add: “The job of a responsible government is not simply to watch this change.

“This moment demands an active government stepping up to secure Britain’s future. A government on the side of working people.

“To grasp the opportunities that we now have and help Britain reach its full potential, we need to go further and faster to kickstart growth, protect national security and make people better off through our Plan for Change.”

It comes as the Scotland Secretary clashed with the SNP Westminster leader Stephen Flynn while appearing before the Scottish Affairs committee. Mr Flynn challenged the minister over cuts to welfare, suggesting Government targets of cutting £5 billion from welfare would have a knock on effect on the block grant.

Replying, Mr Murray said: “There will be no reduction in the budget up to the end of this current spending round, which is 25/26.

“It’s important to be clear that the £5 billion reduction that’s been touted is in the increase, not the £5 billion in the current budget. And that’s why the impact on the Scottish budget is zero in terms of what has been produced”.

Afterwards, Mr Flynn said: “Ian Murray was a member of the Labour Cabinet who agreed to this £5 billion cut to disability support – and yet today he was desperately washing his hands of the damaging decision he was part and parcel of.

“It is also deeply concerning, but perhaps very telling, that the Secretary of State for Scotland signed off on these massive cuts without knowing the financial impact they would have in Scotland or how many disabled Scots would be effected.

“Ian Murray in essence is telling us all to wait another 3 months until the UK spending review in June – which adds to the cruel uncertainty Labour has already created for disabled people waiting for their pockets to be picked.

“Rather than cheerleading the Chancellor to introduce a new era of Labour austerity, Ian Murray should have opposed these cuts to disability support from day one. Instead, he has chosen to support a Labour Cabinet which is punching down on the poorest, imposing cuts and breaking more election promises by the day.”

Also on Tuesday, Ms Reeves sought to blame deteriorating public finances on a global rise in borrowing costs.

Speaking to broadcasters ahead of her statement, the Chancellor said Britain had not been “immune” from global increases in the cost of government debt.

The Scotland Secretary stressed there will be no cut to the block grant | PA

She said: “We can see that the world is changing, and part of that change is increases globally in the cost of government borrowing – and Britain has not been immune from those challenges.

“The OBR (Office for Budget Responsibility) will set out their verdicts on growth and on the public finances today, but we will continue to meet the fiscal rules I set out in the budget last year.

“Economic stability is non-negotiable, I will never play fast and loose with the public finances like the previous government did.”

The planned cuts to welfare have proved deeply controversial, with public health experts warning ahead of the statement that “people will die” as a result.

Writing in the British Medical Journal, they warn that 15 years of austerity policies have already led to life expectancy worsening in Britain’s most disadvantaged areas, and that further cuts to social security will cause further deaths.  

Professor Gerry McCartney, of the University of Glasgow, said: “There is now substantial evidence that cuts to social security since 2010 have fundamentally harmed the health of the UK population.

"Implementing yet more cuts will therefore result in more premature deaths. It is vital that the UK Government understands this evidence and takes a different policy approach.” 

Professor Danny Dorling from the University of Oxford added: “There is a ‘moral case’ to help the poorest and most vulnerable members of our society, not to enact measures which we know will cause immense suffering.”

Professor Kat Smith, of the University of Strathclyde, said: “We know from multiple studies, and from the previous UK Governments’ actions, that cutting disabled people’s benefits will not move people into work - rather, it will cause unnecessary harm. A different policy approach focusing on high quality and more accessible jobs, and ensuring that people have sufficient income to live healthy lives, is required.” 

“There is a ‘moral case’ to help the poorest and most vulnerable members of our society, not to enact measures which we know will cause immense suffering,” emphasized Dr David Walsh, of the University of Glasgow.