Britain’s defence establishment has warned that the armed forces face a funding crisis that could undermine efforts to modernise the military, with one defence contractor claiming the UK has “literally no money” available for the task.
The anonymous contractor said the armed forces lacked sufficient resources to modernise at the pace required, with “virtually no investment going into autonomous systems”.
The warning comes as ministers face growing pressure to increase defence spending in response to Russia’s war in Ukraine and a deteriorating European security environment.
The contractor described the situation as a “national emergency” and accused the political establishment, “especially Labour”, of failing to understand the scale of the threat.
Speaking exclusively to GB News, the contractor warned: “They’ll get it only when it’s too late. We need to suffer some pain before we kick into gear, and it may be too late.
“The European countries are getting on with it and have all had the oh s*** moment. The UK isn’t there yet. I’m very worried.”
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The warning places further scrutiny on Chancellor John Healey’s approach to defence spending ahead of his first Budget in October. The Treasury has confirmed that the Government will not meet the previously outlined target of spending 3 per cent of GDP on defence by 2030.
Healey had previously resigned as Defence Secretary under Sir Keir Starmer over the Government’s failure to commit to spending targets that he regarded as necessary for national security.
Sir Ben Wallace, the former Defence Secretary, criticised the Government’s Defence Investment Plan, arguing that increased headline investment had not translated into sufficient resources for the day-to-day operation of the armed forces.
“The Dip (Defence Investment Plan) itself revealed a real-term cut in the day-to-day running costs of the MoD budget,” he said.
“Every time this government has been called upon to up our defences with real money, it has answered with spin and Treasury tricks.”
Wallace added: “It doesn’t fool British companies, it doesn’t fool the men and women of the armed forces who must live with the cuts, and it definitely doesn’t fool our enemies.”
He said: “John Healey resigned over the situation. He will look a fool if, as Chancellor, he doesn’t now fix it with a real injection of cash to our forces.”
Asked to identify Britain’s biggest threat, Wallace gave a one-word answer: “Russia!”
Lord Richard Dannatt, former head of the British Army, has similarly warned that the Government is failing to match its rhetoric on national security with immediate spending.
He described Labour’s response as “dangerously pathetic”, arguing that ministers were making “Promises for tomorrow, but providing just scraps for today.”
He told the People’s Channel: “How many times does the case have to be made to those in government and across the political spectrum that we are facing huge security challenges, yet the response is dangerously pathetic.”
“Promises for tomorrow but just scraps for today.”
Dannatt said the October Budget would represent a decisive test of the Government’s willingness to translate its defence commitments into additional resources.
“The next real test will be the Autumn Budget. Burnham and Healey must show that they love this country enough to protect it, and her people, properly. If this means tax rises – so be it.”
The Government is also facing criticism over the presentation of its defence spending plans. Former prime minister Sir Keir Starmer, the Ministry of Defence and the Welsh Office have all been criticised by the UK Statistics Authority over the use of statistics describing future defence expenditure.
Starmer and government departments had promoted a £270bn figure as an increase in defence spending, before the Government acknowledged that the figure represented total spending over the 2025-2029 period rather than an additional £270bn.
Danny Kruger, a Reform UK MP, said the episode highlighted wider concerns over the state of Britain’s military capabilities.
“This is a damning indictment of our hollowed-out defence capabilities and the open contempt this Labour government shows for the British military.”
He added: “The world is becoming ever more dangerous, and it seems like the British government is the very last to wake up to this fact. It’s posing a grave danger to the British public.”
The Ministry of Defence rejected the suggestion that investment in military technology was being neglected.
An MoD spokesman said: “The Defence Investment Plan sets out significant investment in the innovative technologies our Armed Forces need that will shape the battlefield of tomorrow.
“Drawing on lessons from Ukraine, we are investing more than £5 billion in drones and autonomous systems and, through a landmark AI partnership announced this week, are working with Ukraine to accelerate the development of next-generation military capabilities using real-world battlefield insights.
“Alongside this, we are investing over £11 billion in munitions and weapons to increase UK stockpiles, strengthening warfighting readiness.”
The dispute reflects a broader tension facing European governments: whether long-term defence investment plans can be converted into the immediate military capacity required as Russia’s war continues and European allies reassess their reliance on US security guarantees.
For Britain, the central question is increasingly fiscal as well as strategic. Ministers must balance higher defence spending against already significant pressures on public finances, while convincing investors, allies and the armed forces that promised modernisation will be backed by sufficient resources.
The October Budget is therefore likely to become an important test of whether the Government’s defence ambitions are matched by the money required to deliver them.
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