Did Labour leave a £38 billion black hole in defence spending?

“It was a Labour government that left our defence budget in a parlous state with a £38 billion black hole."

Suella Braverman MP 28 June 2018

This is a claim with a long and difficult history, and has never been fully and publicly substantiated by the government.

We factchecked the same claim in 2011 and again in 2012 and 2014. At those times the Ministry of Defence (MoD) provided little supporting evidence to explain the figure, and the Commons Defence Committee said in 2011 it couldn’t verify the statement based on the limited information it was given from the government.

We got in touch again with the Ministry of Defence who directed us to the 2010 Strategic Defence and Security Review, which is where the figure first surfaced. It wasn’t aware of any further updates to the figure since we last looked at the issue.

What we know now

The ‘black hole’ is a funding gap, here covering a 10 year period. It broadly refers to the difference between what the MoD thinks it will need to fund in future and its actual budget—assuming the budget only rises in line with inflation.

So to close a funding gap, the government has to either increase the budget beyond inflation year-on-year, or make savings.

It’s not a very precise figure either. Estimating your future costs is difficult. Defence budgets have to take into account things like changes in fuel price and exchange rates, which tend to be volatile. The pound dropped significantly against the US dollar following the EU referendum in 2016, for example, which couldn’t have been predicted back in 2010.

The government published a breakdown of the claimed £38 billion gap: £20.5 billion was down to equipment procurement and support and the rest on “other pressures” such as the costs of employing service personnel.

But these figures differed markedly from estimates produced by the National Audit Office (NAO) at the time, putting the funding gap at £6 billion over the decade.

So what’s happened to the ‘gap’ since then?

There’s no equivalent estimate for the size of the current gap overall—instead the National Audit Office has published a series of reports looking at funding pressures in different parts of the defence budget like equipment, estates and personnel.

At the start of 2018 it found—based on figures agreed with the Ministry of Defence—that the government’s 10-year plan for defence equipment wasn’t affordable. “At present the affordability gap ranges from a minimum of £4.9bn to £20.8bn if financial risks materialise and ambitious savings are not achieved.”

The MoD disputes the NAO’s interpretation of the gap, saying the higher end of the estimate is unrealistic and that it expects to make efficiency savings to help deal with it.

The NAO has also identified funding gaps in other parts of the defence budget: “Our past work has identified an £8.5 billion funding gap for managing the Department’s estate. Also, the Department faces challenges in managing its staff budget.”