Labour defence spending claims: Wallace says £5bn a year of spy money is being counted

Analysis | By Matt, Editor

In February 2025, Downing Street announced that “the definition of defence spending will be updated” to count the work of Britain’s security and intelligence agencies, lifting its 2027 figure from 2.5% to 2.6% of GDP. On Monday, the Government told reporters it calculates defence spending under Nato’s definition, “which has not changed”. (Prime Minister’s Office; The Telegraph)

That gap is the heart of the Labour defence spending claims now before the statistics watchdog. In a letter reported by The Telegraph on Monday 26 October, former Conservative defence secretary Sir Ben Wallace accused Andy Burnham’s government of using billions in spy-agency money to look on course for its Nato commitments.

“Telling the men and women of the Armed Forces and the public that they are spending more while in real terms day-to-day funding on our Armed Forces is being cut is an insult to them,” he wrote. “It fools no one inside defence, our allies and our enemies.”

Updated, in 2025. Not changed, in 2026.

The news, without the gloss

Sir Ben, defence secretary from 2019 to 2023, says the Treasury changed what counts as “Nato-qualifying defence spending” to take in, from 2027-28, the Single Intelligence Account that funds MI5, MI6 and GCHQ at about £5 billion a year.

By his figures, that makes 2027-28 look like 2.7% of GDP when the Ministry of Defence itself spends 2.3%. Of claims that this is a real increase for the Armed Forces, he wrote: “In material part, they are not.”

The UK Statistics Authority said: “We can confirm that the Office for Statistics Regulation will consider the concerns that have been raised with us in relation to the presentation of UK defence spending by the Government.” It has not reached a view. (The Telegraph; GB News)

What they said then

John Healey, 30 January 2023, then shadow defence secretary, in the Commons. When Labour left office in 2010, he said, the Army “stood at over 100,000 full-time troops and we were spending 2.5 per cent of GDP on defence”. (The National)

Labour’s 2024 manifesto. “We will set out the path to spending 2.5 per cent of GDP on defence.” No date was given. (Labour Party)

Sir Keir Starmer, 25 February 2025, then Prime Minister, in the Commons. Counting “our intelligence and security services”, he said, “taken together, we will be spending 2.6% on our defence from 2027.” (Hansard, via the House of Commons Library)

The UK Statistics Authority, 5 August 2026. On a claimed £270 billion “increase”, it said: “We agree that it is incorrect and misleading to describe the £270 billion as an increase in defence spending.” It was the total planned spend. (Office for Statistics Regulation)

John Healey, 11 June 2026, resigning as defence secretary. The defence investment plan “falls well short of what is required for defence and the country at this dangerous time”, he wrote, rising “to just 2.68% of GDP in 2030, when we will reach 2.6% next year”. (The Independent)

That 2.6% is the figure No 10 said would include the spy agencies. Healey is now the Chancellor, and delivers his first Budget on Wednesday. You can read more in our report on Healey’s carbon charge on fuel imports.

What they’re saying now

A Government spokesman, 26 October 2026. “We are delivering the largest sustained increase in defence spending since the end of the Cold War, investing nearly £300bn over the next four years. The UK is the third highest spender in Nato.” (The Telegraph)

Luke Pollard, defence minister, 26 October 2026. “It takes some brass neck for a former Conservative defence secretary who admitted his own party ‘hollowed out and underfunded’ our Armed Forces to complain.” (The Telegraph)

The largest increase since the Cold War. The one where the spies now count.

The numbers behind the spin

Year	UK defence spending, Nato definition (% of GDP)
2014	2.13%
2019	2.06%
2020	2.33%
2023	2.22%
2024	2.28%
2025 (estimate)	2.32%
2026 (estimate)	2.56%

The line that should worry ministers is 2025. After all the speeches, Britain’s estimated share was 2.32%, below the 2.33% of 2020.

The caveat: the pandemic shrank GDP and flattered 2020, and 2026 does show a rise. Sir Ben’s complaint is about what comes next. The Commons Library says the whole intelligence account, £4.5 billion in 2025-26 rising to £5.4 billion in 2028-29, will count towards Nato-qualifying spending by 2027.

In plain words: by No 10’s own account, part of the rise Labour boasts about is money for spies, not soldiers. The Army’s full-time trained strength was 75,200 on 1 July 2026, the Ministry of Defence says. The measures differ, but Healey put the 2010 figure at “over 100,000”. (Ministry of Defence)

Pollard has a fair point. Sir Ben admitted in 2023, as a Conservative defence secretary, that the forces had been “hollowed out and underfunded”, and the Commons Library notes they counted parts of the intelligence budget from 2015. Nato’s definition, which does not mention intelligence agencies, has indeed not changed. But none of that rescues Labour. It was Labour that “updated” what Britain puts in, Labour that sold the result as the biggest increase since the Cold War, and Labour’s own defence secretary who quit saying it fell “well short”.

What it means for you

The watchdog says the Government plans to spend £270 billion on defence over this Parliament, from 2025-26 to 2028-29. By our sums that is about £185 million a day of your money. The intelligence account alone, at around £5 billion a year, is roughly £13.7 million a day.

You deserve to know if it buys soldiers or relabels spies. See how the Defence Secretary has told Britons to be ready for war by 2030, and how British troops are rehearsing a Ukraine deployment with Nato allies.

Verdict

This is opinion, built on the record above.

Labour cannot have it both ways. Either the definition was “updated” to count the spy agencies, as No 10 announced in 2025, or nothing has changed, as the Government said this week. The man writing Wednesday’s Budget quit in June saying the money was not there. He knows a real increase from a relabelled one better than anyone.

The people being let down are the men and women of the Armed Forces, and the taxpayers told they are paying for a bigger military.

Frequently asked questions

Is the Government counting intelligence spending as defence spending?

Yes, partly. In February 2025 No 10 said the definition would be updated to recognise the intelligence agencies, taking the 2027 figure to 2.6% of GDP. The Commons Library says the whole Single Intelligence Account will count towards Nato-qualifying spending by 2027.

Does Nato allow intelligence spending to count as defence?

Nato’s definition covers spending to meet the needs of armed forces, allies or the alliance, and does not explicitly mention intelligence services. The UK has counted parts of the intelligence budget since 2015. Whether counting all of it is fair is now before the statistics watchdog.

What did Sir Ben Wallace say about defence spending?

In a letter reported on 26 October 2026, the former defence secretary said counting intelligence spending makes 2027-28 look like 2.7% of GDP when the Ministry of Defence spends 2.3%. The Office for Statistics Regulation says it will consider his concerns.

Sources

• The Telegraph, 26 October 2026: Labour accused of falsifying defence spending
• GB News, 27 October 2026: Labour faces defence spending investigation (live politics page)
• Prime Minister’s Office, 10 Downing Street, 25 February 2025: Prime Minister sets out biggest sustained increase in defence spending since the Cold War
• House of Commons Library, 2026: UK defence spending (CBP-8175)
• House of Commons Library, 9 October 2025: UK to spend 2.5% of gross domestic product on defence by 2027
• Office for Statistics Regulation, 5 August 2026: Letter from Penny Young to James Cartlidge MP: defence spending
• The Independent, 11 June 2026: Defence secretary John Healey’s resignation letter in full
• BBC News, 11 June 2026: Healey quits as defence secretary
• The National, 30 January 2023: British Army hollowed out and underfunded, says Ben Wallace
• Labour Party, June 2024: Change: Labour Party manifesto 2024, Strong foundations
• Ministry of Defence, 23 September 2026: Quarterly service personnel statistics: 1 July 2026
• Benchmark Canada, compiling Nato data, October 2026: Defence spending: Nato, Defence Expenditure of Nato Countries (2014-2026), Table 3