Defence spending will fall -- and rightly so

Britain, a warrior nation, will be forced to take a more pragmatic approach

All governments are reluctant to cut defence spending, or rather be seen to do so. With Britain's self-image as a warrior nation and its belief that its armed forces really are "the best in the world", no politician will freely admit to reducing the defence budget.

But it is increasingly clear that the next government will have to make cuts of roughly 10-15 per cent in real terms. Even the Tories, who still see themselves as the party of the armed forces, will have to slash the defence budget if they are to maintain their commitment to ringfence health and international development spending.

The latest report from the Royal United Services Institute shows how these cuts could shrink the armed forces by up to a fifth (see graph). Although we can expect no mainstream Labour or Tory figure to make it, there is a strong case, given the £178bn Budget deficit, for cutting defence spending.

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Data published by the Stockholm Peace Research Institute in 2009 placed the UK fourth in a table of the top ten military spenders in current US dollars. The US led the table, spending $607bn on defence, with China in second place, spending $84.9bn. France came in third place ($65.7bn) and the UK was just behind with $65.3bn. British defence spending as a percentage of GDP is 2.6 per cent.

Many will assume that Britain should fight to maintain its position in the international pecking order, but that ignores an alternative approach. Instead of struggling to project power abroad, we should focus on pursuing fairness at home. This means prioritising spending on education, health and anti-poverty measures.

In the post-recession world, this sceptred isle will be forced to become a more pragmatic and modest nation. The £20bn renewal of Trident, little more than a national virility symbol, must be cancelled. Military intervention abroad, humanitarian or otherwise, will become increasingly unthinkable.

It is a case that Labour should be prepared to make. As James Purnell wrote in his excellent Guardian article this week, by conceding that major spending cuts are needed in some areas, the government will be in a better position to argue that the deficit must not be cut at a rate that threatens economic recovery. Let's hope that Labour's "radical manifesto" reflects this truth.


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George Eaton is political editor of the New Statesman.

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David Cameron’s starter homes: poor policy, but good politics

David Cameron's electoral coalition of buy-to-let retirees and dual-earner couples remains intact: for now.

The only working age demographic to do better under the Coalition was dual-earner couples – without children. They were the main beneficiaries of the threshold raise – which may “take the poorest out of tax” in theory but in practice hands a sizeable tax cut to peope earning above average. They will reap the fruits of the government’s Help to Buy ISAs. And, not having children, they were insulated from cuts to child tax credits, reductions in public services, and the rising cost of childcare. (Childcare costs now mean a couple on average income, working full-time, find that the extra earnings from both remaining in work are wiped out by the costs of care)

And they were a vital part of the Conservatives’ electoral coalition. Voters who lived in new housing estates on the edges of seats like Amber Valley and throughout the Midlands overwhelmingly backed the Conservatives.

That’s the political backdrop to David Cameron’s announcement later today to change planning to unlock new housing units – what the government dubs “Starter Homes”. The government will redefine “affordable housing”  to up to £250,000 outside of London and £450,000 and under within it, while reducing the ability of councils to insist on certain types of buildings. He’ll describe it as part of the drive to make the next ten years “the turnaround decade”: years in which people will feel more in control of their lives, more affluent, and more successful.

The end result: a proliferation of one and two bedroom flats and homes, available to the highly-paid: and to that vital component of Cameron’s coalition: the dual-earner, childless couple, particularly in the Midlands, where the housing market is not yet in a state of crisis. (And it's not bad for that other pillar of the Conservative majority: well-heeled pensioners using buy-to-let as a pension plan.)

The policy may well be junk-rated but the politics has a triple A rating: along with affluent retirees, if the Conservatives can keep those dual-earner couples in the Tory column, they will remain in office for the forseeable future.

Just one problem, really: what happens if they decide they want room for kids? Cameron’s “turnaround decade” might end up in entirely the wrong sort of turnaround for Conservative prospects.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.