Key infrastructure budgets will face cuts as the government looks to pay for the long-awaited Defence Investment Plan (DIP) which is being partly funded by changes to roads and energy capital projects.

After months of speculation and the resignation of former defence secretary John Healey, prime minister Keir Starmer has published the DIP, the delivery roadmap for last year's Strategic Defence Review.

An additional £15bn of funding will go on defence - a total of £298bn over the next four years – committing the UK to 2.7% of GDP on defence by the end of this Parliament.

Between 2026/27 and 2029/30 the plan includes: £63.6bn for the Defence Nuclear Enterprise, £27.8bn for air capabilities, £19.2bn for land forces, £18bn for maritime and £11.1bn for weapons and munitions. More than £5bn goes to drones and autonomous systems, £7.5bn  to the Digital Backbone and Digital Targeting Web and more than £100m to Taskforce RAID to accelerate military AI.

The plan avoids committing to 3% of GDP by 2030, the very issue that prompted John Healey's resignation on 11 June. Healey accused the Government of underfunding the military despite intelligence warnings that Russia could attack a NATO member by the end of the decade.

For the consultancy and engineering sector, relevant commitments include £22.7bn for defence infrastructure and the estate over four years, including £9bn over the next decade for the Defence Housing Strategy and £1.4bn for Single Living Accommodation.

There is also a Back British industrial push, five Defence Growth Deals worth £250m across Plymouth, South Yorkshire, Scotland, Wales and Northern Ireland, and a pledge to increase direct SME spending by £2.5bn by 2028.

On reform, the Ministry of Defence promises £10.7bn of efficiencies, £2bn of it from the estate, alongside investment in renewable generation, battery storage and potentially Advanced Modular Reactors to reduce reliance on external energy supplies.

But funding for the DIP means cuts to existing budgets elsewhere, with every department facing around a 1% capital cut, with transport and energy hit hardest – meaning the Department for Transport will have to give up £700m from roads and the Deparment for Energy Security and Net Zero having to find £2bn .

Only £10.3bn of the required reallocation has been identified. The rest is deferred to the next Budget, under a new prime minister, with detail promised “by the autumn”.

The decisions have already prompted concerns with a new report from the Transition Security Project stating the cuts used to fund the additional £15bn for defence leading to around 10,000 net jobs lost in the UK.

The report, Buying the Dip: The Defence Investment Plan Will Lead to Domestic Unemployment, analyses the impact of the cuts used to fud the DIP.

It says the cuts are “deepest” in the energy and transport departments, which will lose a combined £3.7bn by the 2029/30 financial year. Plus, if proportional cuts are used in the same way to fund the £4.7bn of unbudgeted funding unaddressed in the DIP, then these job losses could more than double and results in the energy department losing more than £3.9bn in capital investment by the 2029/30 financial year and transport £2.4bn.

Ben Brittain, director of public affairs at the Association for Consultancy and Engineering, said: “We back the move to long-term defence planning, but an £11.6bn gap as identified by the National Audit Office, is a serious one.

“When defence budgets are squeezed, infrastructure is usually first to be cut – and ACE members are the ones delivering the bases, military housing estate, and resilience that every other capability depends on. The ambition for greater defence resilience without funding certainty puts delivery at risk. Axing growth-driving projects, such as road and energy projects, to fund defence is the wrong way to fund defence sustainably.”

Darren Carlile, national security and government lead at Ramboll, said while essential, increased defence spending must not “come at the expense” of equally critical investment in net zero and resilience.

“Defence and decarbonisation are both fundamental to our national security and should be advanced together. The Strategic Defence Review rightly recognises the importance of investing in UK industrial capacity, supporting veterans, and transforming the defence estate. As military accommodation, infrastructure and surplus land are renewed and developed, there is a significant opportunity to embed sustainability and climate resilience from the outset.

“A modern defence estate should not only strengthen military capability but also create resilient communities, improve energy efficiency, and support long-term economic growth. By integrating resilience into defence infrastructure today, the UK can enhance both national security and environmental security for the future."

Andy Scott, managing director, defence UK at Turner & Townsend, said while the DIP fell short of expectation raised by last year’s Strategic Defence Review, he said it was a “positive signal” that government recognises defence as both a national security imperative and a driver of economic growth.

“Commitments such as the £50bn defence export facility and greater support for British businesses within procurement have the potential to strengthen sovereign capability, create skilled jobs, accelerate innovation and deliver lasting social value across the UK,” he said.  

“The size of the settlement will inevitably remain under scrutiny.  Though it won’t fully bridge the gap, private investment must be used to make public funding go further.  This approach offers a particularly strong opportunity in areas such as service housing, which has been widely reported to have been deprioritised in the plan but remains vital to recruitment, retention and the everyday resilience of the Armed Forces.

“The critical test now is delivery of the funding which has been committed. The plan’s focus on drones, autonomous systems, AI, future combat air and the nuclear deterrent reflects both the capabilities that will underpin future defence and the rapidly evolving nature of modern conflict.

“But what matters is not just what we invest in, or how much, but how quickly and effectively that investment can be translated into operational capability. Building the skills, industrial capacity and cross-sector partnerships to procure and deliver with pace and agility will be essential if the UK is to improve value for money, strengthen our security and keep ahead of evolving threats.”

Click here to read the full Defence Investment Plan 
Click here to read the Transition Security Project's report.