In 2016 the UK budget for defence sat at £35.3bn, making the UK’s the fifth biggest defence budget in the world. The UK has continued to meet the NATO commitment to spend 2 per cent of GDP on defence each year. In addition, the Government is committed to increase defence spending by at least 0.5 per cent above inflation in each year of this Parliament.
What is the MOD spending money on?
The Ministry of Defence (MOD) procures everything from military fighting vehicles to education services, which means there are opportunities for almost all types of businesses in the UK.
In total, defence expenditure in 2016/17 was £35.3bn. That makes the UK spend per person on defence in 2016/17 £538 (the third highest in NATO). Of this total, defence procurement spend was over £19 billion.
Currently the DIO (Defence Infrastructure Organisation) spends £3 billion each year buying infrastructure services. A new budget for this type of expenditure will be published in the DIO 2018 Procurement Plan, which is due to be released in March.
Planned expenditure 2016-2026
A recent Government report has stated that the planned expenditure on equipment and support between 2016 and 2026 is currently sitting at £178bn.
The UK Defence in Numbers report has included a breakdown of the spend:
Submarines – £44.0bn
(all Submarines and Atomic Weapons Establishment)
Combat Air – £18.0bn
(e.g. Typhoon, Tornado, F-35)
Ships – £19.0bn
(e.g. T45s, T26s, Queen Elizabeth Carrier, Support Shipping)
Air Support – £16.6bn
(e.g. Voyager, A400M, C130)
Helicopters – £10.6bn
(e.g. Merlin, Apache, Chinook)
Land Equipment – £19.1bn
(e.g. AJAX and personal equipment)
Weapons – £13.5bn
(e.g. Air and sea launched missiles)
Intelligence, Surveillance, Target Acquisition & Reconnaissance – £4.6bn
(Air traffic management and multiple small programmes)
Where in the UK is defence spending money?
Past figures can suggest which regions receive the most money from the MOD. MOD spent £18.7bn with UK industry in 2015/16. This means that, per capita, MOD spent approximately…
| Yorkshire & The Humber: | £40 |
| Northern Ireland: | £50 |
| West Midlands: | £100 |
| East of England: | £140 |
| North East: | £150 |
| North East England: | £150 |
| East Midlands: | £190 |
| London: | £200 |
| Scotland: | £280 |
| Wales: | £280 |
| North West England: | £290 |
| South East England: | £570 |
| South West England: | £810 |
What jobs are funded by the MOD?
It is estimated that MOD expenditure with UK industry in 2015/16 directly supported 1 in every 200 jobs in the UK. The breakdown of this includes:
Technical, Financial Services & Other Business Services (including R&D, Equipment testing, Education and Healthcare)
42,800 jobs
Shipbuilding and Repair
19,250 jobs
Other Manufacturing
10,100 jobs
Aircraft and spacecraft
7,150 jobs
Weapons and Ammunition
5,950 jobs
Construction
5,900 jobs
Increase in spending with SMEs
In the latest MOD report ‘Industry for Defence and a Prosperous Britain: Refreshing Defence Industrial Policy’, current Defence Secretary Gavin Williamson confirmed that the MOD would continue to spend with SMEs.
The report stated that the goal is to place 25% of direct and indirect defence procurement spend with SMEs by 2020, compared with the 18.1% total in 2015/16.
Become an MOD supplier
Are you interested in doing business with the MOD? Join our free webinar on 20 February 2018 and learn how to win contracts in both the private and public sector. You can also register as a supplier today for free.