The Burnham defence welfare row broke into the open at Prime Minister’s Questions, where Andy Burnham rejected Conservative proposals to cut housing benefit by £4 billion to fund increased military spending, arguing such a move would produce unprecedented levels of homelessness.
Burnham told Parliament he did not believe ‘taking £4bn out of housing benefit is going to get the right consensus around this issue, because that would create levels of homelessness in this country that we wouldn’t have seen before, hundreds of thousands of children in temporary accommodation.’ He added: ‘We do everything to support our national security, but it can’t come at the expense of social security. Having strong national security also depends upon having resilience in our communities.’
The remarks came in response to attacks from Tory leader Kemi Badenoch over the government’s absence of a plan to raise defence spending to three per cent of GDP. The Prime Minister’s spokesman later clarified that Burnham still regarded national security as the ‘first duty’ of the government, seeking to limit the political damage from the exchange.
The Burnham defence welfare row and the scale of the fiscal challenge
The numbers framing the Burnham defence welfare row are considerable on both sides of the ledger. The welfare budget is set to reach 11.1 per cent of GDP by 2030, up from 10.7 per cent currently, a rise of just under £40 billion between the current financial year and 2029-30. Pensioner spending is projected to climb from £169.2 billion to £187.5 billion, while disability benefits are forecast to increase from about £50.2 billion to £61.1 billion.
The Conservatives seized on Burnham’s comments as evidence that the government lacks a credible plan to bring welfare expenditure under control. Their own proposals, which Burnham attacked, include reducing the local housing allowance and cutting social sector rents alongside the headline £4 billion housing benefit reduction.
On the defence side, the budget is set to reach only 2.7 per cent of GDP next year. According to the House of Commons Library, the government committed in February 2025 to raise defence spending to 2.5 per cent of GDP by 2027 under the Nato definition, or 2.6 per cent when additional security and intelligence elements are included, with a further commitment to reach 3 per cent of GDP in the next Parliament. No clear funding plan for lifting spending to 3.5 per cent of the economy by 2035 has yet been set out.
The government is also tasked with finding about £15 billion over a four-year period in extra taxes and spending cuts to back the current Defence Investment Plan. The government has said it will set out its approach to hitting defence spending targets at next year’s Spending Review rather than at the Budget.
Nato targets and the UK’s standing in the alliance
The backdrop is a substantially more demanding set of international commitments. According to the BBC, at a Nato summit in the Hague in June 2025 the UK and other members committed to spend 5 per cent of GDP on defence and security in total, with 3.5 per cent directed to Nato-qualifying ‘core defence’ by 2035. The remaining 1.5 per cent could be made up of spending to protect critical infrastructure, defend networks, ensure civil preparedness and resilience, and strengthen the defence industrial base.
Against that backdrop, figures from the UK Government show the UK spent $84.2 billion on defence in 2024, making it the third-highest spender in Nato that year. It was the first year since 2014 in which the UK had not held second place in the alliance’s spending rankings.
Chancellor John Healey’s position adds further complexity. Healey resigned from Sir Keir Starmer’s previous shadow cabinet over a failure to commit to funding a boost in military expenditure to three per cent of GDP by 2030, which makes the government’s current trajectory an uncomfortable one for him personally.
Welfare review and the welfare bill target
Burnham has said he wants to ‘get the welfare bill down’ and has pointed to a review by former health secretary Alan Milburn into Neets, young people not in employment, education or training. A separate report by Sir Stephen Timms on disability payments is also pending. Neither review is expected to report until after the Budget.
Burnham has also stated he does not support ‘crude cuts’ to welfare after the government failed to deliver £5 billion in savings on disability payments. The government raised welfare spending at last year’s Budget when it lifted a two-child benefit cap, adding to the pressure it now faces to demonstrate fiscal discipline across both the welfare and defence budgets simultaneously. The Spending Review will be the first real test of whether those competing demands can be squared.
