The defence secretary, Gavin Williamson, is unlikely to receive any increase in defence spending in the coming year in spite of waging a relentless political campaign against the Treasury, according to Whitehall sources.
Williamson is scheduled to meet chancellor Philip Hammond in the next fortnight in a renewed attempt to secure concessions ahead of a Nato summit in Brussels on 11 and 12 July.
But a source familiar with the negotiations said there is no chance of the Treasury, faced with a promised rise in NHS spending and other demands on the budget, conceding any more cash to the Ministry of Defence.
Williamson met Hammond and Theresa May on Tuesday to discuss the results of a year-long defence review scheduled to be announced before the Nato summit. But the meeting broke up without him securing any promises of more cash.
He also met the chief secretary to the Treasury, Liz Truss, but that too ended without him wringing any more funding.
It came as May declined to confirm at a press conference alongside Nato secretary-general Jens Stoltenberg in London that the UK is still a “top-tier” military power. Top-tier means able to fight a nuclear, cyber and conventional war anywhere in the world. Only the US, China, Russia, France and the UK are usually included in the group.
The Financial Times reported on Thursday that May, at a Downing Street meeting, had asked Williamson to justify the UK being a “tier-one” country. Despite denials from Downing Street, a source familiar with the meeting said on Thursday that May had questioned whether the UK needed all these capabilities.
Her question came against the backdrop of a review aimed at shaking up British defence and security needs to match 21st-century threats, due for completion in the next few weeks.
In a press conference after talks with Stoltenberg, May refused to state explicitly that Britain would remain a tier-one military power, despite being asked to do so, but did say “the reports that you have read are not correct”.
No 10 sources categorically denied that she had cast doubt on the UK’s status, after questions were raised about why the prime minister had chosen not to use the phrase.
Instead, May said that the UK was “a leading defence nation” and stressed the UK’s commitment to Nato. “We will continue to be that leading contributor to the alliance but also a leading defence nation,” she said.
“We will continue to spend 2% of our GDP on defence. We will continue to contribute in a whole variety of ways across conventional, cyber and nuclear capabilities.”
May hinted she was content with the status quo on defence spending. “If you look at our defence budget, we’re the second biggest defence budget in Nato, we’re the biggest defence budget in Europe, and we have committed to significant sums, £179bn of spend on new equipment over the next decade or so,” she said.
Williamson’s intense politicking, backed by a vocal group of Conservative backbenchers, is beginning to grate with May and Hammond, according to a source, who added that while they were sympathetic to the needs of the military they had become irritated by his tactics.
The MoD is still hoping to secure some more money in the next few weeks, and, failing that, in the autumn.
However, the source said the best the MoD could hope for was a token rise in spending in autumn or early next year, though nothing close to the billions Williamson was seeking.
A second Whitehall source said: “It is clear the Treasury do not want to splash cash around.”
With the government close to announcing the outcome of the public pay review, Williamson is also pushing for a recommendation of an inflation-beating 3% for the forces to be honoured in full. While the Treasury is reported to be sympathetic to a rise for the military, it is concerned about the impact of pay rises across the public sector and looking for a compromise from Williamson.
The Treasury has apparently suggested meeting the 3% “in spirit”, perhaps with compromises over the three-year period.
The government announced in February £200m for the MoD and in March a further £600m for the nuclear submarine programme. There is bafflement at the Treasury that Williamson failed at the time to hail this as a victory.
The row over defence spending comes as Donald Trump has warned European members of Nato to make bigger contributions to its budget. The US spends 3.5% of its GDP on defence.
Stoltenberg, speaking in London, said he wanted the UK to maintain at least its current spending level on defence, 2.1% of GDP, just above the 2% Nato minimum.
The UK was able to play a major role in Nato because it had a full spectrum of defence capabilities, Stoltenberg said. “I expect the UK to continue and maintain that role. To maintain that role, you need to spend and invest in defence.”
The MoD had hoped it could use the Salisbury nerve agent incident and Trump’s threats as opportunities to squeeze more money out of the Treasury.
Faced with a £20bn funding shortfall over the next decade, the MoD claims it can make savings through efficiency. But the Treasury is sceptical, given the failure of the MoD to secure significant savings in the past.