Plans to raid infrastructure budgets to fund a £15bn defence spending boost will result in a net loss of 10,000 UK jobs by the end of the decade, according to an analysis of official government figures.
The finding, produced by researchers at the Transition Security Project, directly contradicts claims by Sir Keir Starmer and Rachel Reeves that redirecting large sums of public money to the Ministry of Defence will drive employment. While the extra defence investment is expected to generate about 10,000 posts by 2029-30, the cuts to other departments will cost nearly double that number – around 20,000 jobs – leaving a net deficit of 10,000.
The analysis draws on the government’s own employment multipliers. Official calculations show that increasing the defence budget by £25.2bn over six years would create an additional 60,000 jobs – equivalent to just 2.4 direct and indirect UK jobs for every £1m spent. By contrast, figures from the Office for National Statistics reveal that each £1m spent on transport generates 11.5 jobs, while every £1m invested in energy and net-zero projects creates 10 jobs.
This stark disparity means that the planned removal of £2bn from other departments in 2029-30 alone will erase nearly 20,000 jobs – almost double the number created in the defence sector. Researchers believe the gap reflects the highly international nature of defence supply chains. Billions of pounds are being spent on equipment such as fighter jets designed to carry nuclear bombs, which are largely manufactured in the United States, effectively exporting UK jobs. The increasingly automated nature of high-end military manufacturing, including a shift toward autonomous weapons and artificial intelligence, is also likely to reduce the number of jobs generated per pound invested.
The Defence Investment Plan
Starmer unveiled the long-awaited Defence Investment Plan on Tuesday, casting it as a cornerstone of his legacy in foreign policy and security as he prepares to leave Downing Street. The plan commits an extra £15bn to the MoD over four years – billed as the largest sustained increase in defence spending since the Cold War – and aims to raise UK defence spending to 2.7% of GDP by 2027-28, with commitments to reach 3% in the next Parliament and 3.5% by 2035.
However, the funding package has been dogged by questions from the outset. Of the £15bn, only £10.3bn has been identified, leaving a gaping £4.7bn hole that will have to be filled at the Budget in 2026. The identified money comes from a series of cuts: a 1% raid on the capital budgets of other government departments (£4bn); an additional £700m from the Department for Transport’s roads programme and £2bn from the Department for Energy Security and Net Zero; and roughly £1bn from rationalising the MoD estate and reprioritising existing defence spending.
The biggest reductions will fall on the energy and transport departments, both of which have large capital budgets. Two road improvement projects have already been halted, and energy officials are examining cuts to schemes including home insulation and carbon capture and storage. The Department for Transport faces £800m in reductions by 2030, potentially affecting major road schemes such as the A38 Derby Junctions and A46 Newark Bypass. The £9.4bn committed to the UK’s carbon capture and storage programme could also be trimmed. Whitehall sources have described acrimonious rows between departments over the reallocation.
The funding gap has now become a problem for Starmer’s successor, widely expected to be Andy Burnham, the new MP for Makerfield. Burnham told LBC radio he was “committed to ensuring defence spending commitments were properly financed” if he became prime minister, but confirmed he had not been warned of the shortfall before Starmer’s announcement. The Transition Security Project, which produced the job-loss analysis, was spun out of the thinktank Common Wealth, which has close links to Burnham.
The disagreements over funding also led to the resignation of defence secretary John Healey just as the plan was due to be announced. Healey had argued for a settlement of £18bn and warned that the final package “could make the country less safe”. Military leaders had previously stated that £28bn was needed. Kevin Craven, chief executive of the ADS Group, described Healey’s resignation as a “damning reflection on the current state of affairs” and warned of severe consequences if the plan were mishandled.
Criticism from experts and unions
Khem Rogaly, co-author of the Transition Security Project report, said: “The idea that military spending can provide a defence dividend is misleading: job losses will result from this latest funding settlement while the opportunity cost of military spending is sharp.
“Far more jobs are created when investing in public needs like health, education and addressing the climate crisis. This latest data suggests that the turn towards autonomous weapons and AI could also mean that military spending creates even fewer jobs per pound than before.”
Andrea Egan, general secretary of the Unison trade union, said: “This timely analysis highlights how making cuts to government departments to bankroll more military spending will result in job losses. This costly and wasteful plan means extra cash for war and overseas interventions, but less for schools and hospitals.”
David Edgerton, professor in the history of science and technology at King’s College London, said he would expect the import content of a road to be lower than that of military equipment, some of which will be fully imported. “There is no reason whatever to expect military expenditure to generate more jobs than any other kind of expenditure, and we should expect it to be far less productive than investment in, say, railways or factories. The defence dividend is broadly speaking a con.”
A government spokesperson pushed back, saying: “Defence is an engine for growth – supporting 272,000 jobs and over 25,000 MoD apprenticeships. The plan will back British workers, businesses and innovation, generate economic growth, create nearly 60,000 new jobs and increase defence exports. But we are in a new era of threat, which demands a new era of defence, and crucially our defence investment plan will energise the transformation of our armed forces to rebuild war-fighting readiness and target our resources, ensuring we are ready to face future threats.”
The defence sector directly supports an estimated 330,000 jobs in the UK, according to industry figures. The ADS Group calculated that the defence industry supported 181,500 full-time equivalent jobs in 2024, and the wider defence, security and resilience sectors added £26.7bn to the economy with a turnover of £60.4bn. British defence exports exceeded £20bn in 2025 – the highest in more than 40 years – underpinned by deals such as £10bn for Type 26 frigates to Norway and £8bn for Eurofighter Typhoons to Türkiye. The MoD is also a major apprenticeship provider, with around 20,000 apprentices in the armed forces and numerous civilian schemes.
Nevertheless, the net job-loss calculation stands. Starmer had promised that “every pound in this plan will work twice, delivering economic growth and opportunity for the British people”, but the Transition Security Project’s analysis of the government’s own data suggests that the arithmetic does not add up for UK employment. The plan includes more than £5bn for drones and autonomous weapons, raising the prospect that future military spending will create even fewer jobs per pound as automation advances.
