UK Plans Hospital, School Funding Cuts to Boost Defense Budget

(Bloomberg) -- The UK government is planning to cut £6 billion ($8 billion) in investment for projects such as schools and hospitals over the next four years to help fund a £15 billion increase in spending on defense, according to local media reports.

Downing Street has been locked in talks with government ministers over the long-delayed Defense Investment Plan after deciding a necessary cash injection for the military should not be funded by tax hikes or higher borrowing. The additional spending is part of a commitment to lift the defense budget from 2.3% of GDP to 2.6% by 2027 and 3.5% by 2035.

All departments face at least a 1% cut in their capital budgets, equivalent to a total of £1.5 billion a year, as first reported by The Sunday Times. Some are facing even deeper budget reductions. The Ministry of Defense, in return, has accepted a smaller package than the £18 billion four-year funding increase it had been demanding.

A government spokesman declined to comment on the reports of cuts to other departments, but said the defense plan would “deliver the best kit and technology into the hands of our front line forces at speed, while investing in and growing the UK economy.”

“We are working to finalize the plan and it will be published as soon as possible,” he said.

The government’s DIP is long overdue, having originally been scheduled for the fall of 2025. On Sunday, Justice Secretary and Deputy Prime Minister David Lammy said the final plan will be published before a NATO summit on July 7-8.

The lengthy delay has undermined the UK’s credibility with allies and been costly for the government, a committee of lawmakers said in a report published on Sunday. 

Geoffrey Clifton-Brown, chair of the Public Accounts Committee, said: “Any government minister attempting to explain away this delay should instead ask themselves what message the bureaucratic drift of the past months has given to the public, as well as the UK’s allies and its adversaries, and simply apologize.”

He added the delay had made procurement more expensive, “hindering the government’s attempt to modernize the Armed Forces.”

More stories like this are available on bloomberg.com

©2026 Bloomberg L.P.