The former Defence Minister said Boris Johnson's announcement to invest an extra £24.1 billion into national security over the next four years shows the intent to keep the UK an "outward-looking nation".
The fund, which is the largest boost to the UK’s defence budget in the last 30 years, both delivers and surpasses the government’s manifesto commitment to exceed the NATO defence spending target.
The funding will mean the UK has the largest defence budget in Europe, and the second largest budget in NATO after the United States, with the UK spending 2.2 per cent of GDP on defence.
This increase in spending will allow creation of 10,000 new jobs a year in the defence and security sectors.
Mr Dunne, who served as a minister in the Ministry of Defence for four years, said: “Defence is the first duty of government, and with this announcement the government has strongly signalled its intent to remain an outward-looking nation on whom our allies can depend.
"I welcomed this material increase in defence funding during the Prime Minister’s statement to the House of Commons and he agreed this will have a significant impact on defence’s contribution to UK prosperity.
"I made clear in my report for the Defence Secretary back in July 2018, there is real scope to invest in defence capabilities to enhance the UK’s prosperity.
"So this multi-year investment in new cutting edge technology will help modernise the equipment plan and get it back on track to help overcome risks emerging from a stop and start procurement.
"At a time of great global uncertainty, I am very pleased the government is standing by our Armed Forces and ensuring UK capability for years to come.”
Mr Dunne, who is chairman of the Environmental Audit Committee, also welcomed a 10-point government plan covering clean energy, transport, nature and innovative technologies.
It is intended to allow the UK to forge ahead with eradicating its contribution to climate change by 2050.
Mr Dunne, who is also chairman of the Environmental Audit Committee, said: “The Prime Minister’s 10-point plan to build back greener, and supporting 250,000 green jobs, is an important commitment a year out from hosting COP26, though somewhat disappointing that of the £12billion funding in the plan, only £4 billion is new.
"I am pleased that the government has put innovation at the heart of moving towards net-zero; powering homes with offshore wind generation and paving the way for a hydrogen town.
"The Climate Assembly has recently called for leadership from Government to reach net zero, and the Prime Minister has set this direction very clearly, especially by bringing forward the phase out of new petrol and diesel fuelled cars to 2030 and hybrid to 2035.
"However, the devil will be in the detail. I hope the private sector and Government can now work together to achieve the overwhelming potential a green future can bring.
"I look forward to scrutinising the government’s performance against each point in the plan as chairman of the Environmental Audit Committee.”