Labour can’t call defence a priority while continuing to avoid funding it

Sir Keir Starmer and Defence Secretary John Healey
Sir Keir Starmer and Defence Secretary John Healey - Stefan Rousseau

The Labour Party manifesto stated the “first duty” of any government is “to keep the country safe”. Correct. Therefore, when it comes to spending, defence should be this Government’s overriding priority.

Yet with tensions rising around the world, and the war in Ukraine reaching the height of its intensity, there is scant proof that this is so. Labour inherited a defence budget which, according to the National Audit Office, was insufficient even to meet the Ministry of Defence’s equipment plan.

The Labour Manifesto pledged “to set out a path to spend 2.5 per cent GDP on defence”. This is welcome, but as of yet has not happened. The recent Budget will increase total defence spending by just 0.01 per cent, rising to 2.19 per cent of GDP by 2026.

In sobering evidence given to Parliament, the deputy director general of the Royal United Services Institute (RUSI) – our pre-eminent defence think tank – spelt out what this means, explaining that the Ministry of Defence is being asked to do a far wider range of tasks that it actually has the resources to fulfil.

The Office for Budget Responsibility forecasts that, putting the impact of all the Budget’s measures together, if the defence spending were to increase to 2.5 per cent GDP by the end of this Parliament then the Government would break its debt rule.

Worse still, many question whether spending 2.5 per cent of GDP will meet our baseline needs, let alone pay the costs of much-needed modernisation. The RUSI estimates that even if defence were to hit 2.5 per cent GDP by 2029/2030, “not all of this will be available for additional investment in conventional forces.Nuclear and submarine spending, which now accounts for almost 40 per cent of planned equipment spending, is due to rise further in the coming years, squeezing the resource available for other areas”.

Meanwhile, as the drums of war grow louder and Donald Trump threatens to reduce the US military commitment to Europe, the Labour government appears more focused elsewhere on other “D”s.

First, decarbonisation: climate change is front and centre of the Government’s economic strategy. This has been embedded into regulators’ remits, and was reflected in the Chancellor’s first Budget. Between 2023 and 2026, the average annual growth rate of funding for the Department for Energy Security and Net Zero will be roughly 10 times that of the Ministry of Defence.

While defence spending is increasing by £2.9 billion this year, the figure looks extremely modest considering that next year £3.9 billion will be spent on carbon capture, usage and storage alone.

It is perfectly legitimate to argue that climate change is a risk to economic prosperity and national security; and that – over the longer term – it poses an existential threat to mankind.

Yes, more wind turbines, solar panels, nuclear power and energy-efficient homes may help strengthen our energy security. But this will take years to happen, and time is not on our side. War clouds are building fast – and there is surely no greater threat to our green energy transition than looming conflict.

Why? Very simply, financing the transition requires trillions of pounds. That finance requires growth. Growth is built on stability and security, giving people confidence to spend, invest and trade. This in turn depends on resilience.

If there is an economic shock, we need secure energy supplies to ensure energy remains affordable; the public finances need a buffer to cushion the economy, so it can support people and businesses. Nobody wins out in a slow growth situation.

For proof, look at the impact of Russia’s invasion of Ukraine. Energy prices – and with it inflation – soared. Growth spluttered, and our debt rose. In a cost of living crisis, people pushed back against the cost of going green. Governments could not rely on renewable energy, and so they turned to coal.

Everything that could go wrong with the transition went wrong. We need to learn from that experience, and do all we can to deter further aggression. To misquote Sun Tzu, he who wants the green transition must prepare for war.

Government spending on the green transition is dwarfed, however, by spending on two other “D”s. First, dependency – welfare. While we cannot be sure if defence spending will rise to 2.5 per cent of GDP by the end of the Parliament, the OBR forecasts spending on incapacity and disability benefits alone will exceed 3 per cent GDP by 2029-30: the entire welfare budget will equate to 11 per cent GDP.

Then there is debt. Thanks to the Government’s spending and borrowing splurge, debt interest is set to hit £122 billion in 2029-30 – roughly double what we spend on defence today.

Put this all together, and it is clear the Government has a misguided view of what matters, and the wrong set of priorities.

It should use the outcome of the ongoing defence review, chaired by the highly capable George Robertson (a former Nato secretary general) to press reset.

In next year’s spending review, the Chancellor must do whatever it takes to raise defence spending to at least 2.5 per cent of GDP, and as fast as possible. Defence must come first.