In November 2020, in the midst of the ‘second wave’ of COVID-19 and despite a projected 10.4 per cent decrease in the United Kingdom’s gross domestic product in 2020, the British Government announced a £16.5 billion budget boost for ‘defence’. The realities of this announcement however remain unclear. The definition of what constitutes the UK’s total military expenditure, continues to be probed in recent years by the House of Commons, think tanks and non-governmental organization experts alike. In particular, it remains opaque why there is a discrepancy between what the British Ministry of Defence (MOD) itself reports as the defence budget (£38 billion for 2019) and what it reports to the North Atlantic Treaty Organization (NATO) as ‘defence expenditures’ (£46.5 billion for 2019).
For its estimate of British military spending, SIPRI uses net cash requirement (NCR) data, as reported in the MOD’s annual reports and accounts since the British fiscal year 2000/2001 (‘the MOD’s NCR figures’). For the years from 1949 until 2000, SIPRI uses NATO defence expenditure data. This enabled SIPRI to publish a consistent time series following accounting changes in British Government spending in the early 2000s. While the MOD’s NCR figures were reasonably close to the UK’s ‘defence expenditure’ figures reported to NATO up to 2012, the two data series began to diverge significantly in subsequent years. In 2019 the difference between the two figures was £8.5 billion.
These discrepancies raise two questions: what are the additional spending items that the UK includes in its NATO defence expenditure figures? Moreover, is SIPRI’s estimate missing parts of British military spending that come from budgets other than the MOD’s NCR?