How much does the UK really spend on defence?

Liam Fox says that we have the fourth largest military budget in the world. Is he right?

If you cut through the military jargon, this morning's report from the defence select committee is remarkably hard hitting. The committee warns that the government's cuts mean the armed forces may be falling below the "minimum utility" required to carry out existing commitments, let alone future ones. Unusually, it also criticises David Cameron directly, stating that "The Prime Minister's view that the UK currently has a full spectrum defence capability is rejected by the committee, as it was by the Single Service Chiefs."

Liam Fox has responded by emphasising that the UK retains the "fourth largest military budget" in the world. But how accurate is this claim? It's true, in cash terms at least, that we're still one of the biggest spenders. In fact, according to the latest figures from the Stockholm International Peace Research Institute (the global authority on defence spending), we're now in third place. Below is the top ten.

Military Spending: the top ten

2010 (US$, at 2010 prices and exchange rates)

1. USA $698bn

2. China $119bn

3. UK $59.6bn

4. France $59.3bn

5. Russia $58.7bn

6. Japan $54.5bn

7. Saudi Arabia $45.2bn

8. Germany $45.2bn

9. India $41.3bn

10. Italy $37bn

Source: SIPRI

But this is a poor measure of a country's commitment to defence spending. A clearer picture emerges if we look at military spending as a share of GDP. Here, in graph form, is the top ten (plus the UK).

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The data, again provided by the Stockholm International Peace Research Institute, comes with several caveats. The figure for Saudi Arabia, for instance (11.2 per cent), also includes spending on what is euphemistically described as "public order and safety". The figure for Israel (6.3 per cent) does not include the $2.9bn that the country received in military aid from the US in 2010. But it still offers a much more accurate picture - the UK does not even make the top 30.

This said, even after the government has cut defence spending by 7.8 per cent in real terms, the UK will still meet the informal Nato commitment to spend at least 2 per cent of GDP on defence, one of just five members - the others are the US, France, Greece and Albania - that does. With this in mind, it's hard to argue that the defence cuts are excessive (although the typically contrarian Simon Jenkins has suggested that they are far, far too small). What is now needed is a clearer alignment between commitments and resources.

George Eaton is political editor of the New Statesman.

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By refusing to stand down, Jeremy Corbyn has betrayed the British working classes

The most successful Labour politicians of the last decades brought to politics not only a burning desire to improve the lot of the working classes but also an understanding of how free market economies work.

Jeremy Corbyn has defended his refusal to resign the leadership of the Labour Party on the grounds that to do so would be betraying all his supporters in the country at large. But by staying on as leader of the party and hence dooming it to heavy defeat in the next general election he would be betraying the interests of the working classes this country. More years of Tory rule means more years of austerity, further cuts in public services, and perpetuation of the gross inequality of incomes. The former Chief Secretary to the Treasury, Seema Malhotra, made the same point when she told Newsnight that “We have an unelectable leader, and if we lose elections then the price of our failure is paid by the working people of this country and their families who do not have a government to stand up for them.”

Of course, in different ways, many leading figures in the Labour movement, particularly in the trade unions, have betrayed the interests of the working classes for several decades. For example, in contrast with their union counterparts in the Scandinavian countries who pressurised governments to help move workers out of declining industries into expanding sectors of the economy, many British trade union leaders adopted the opposite policy. More generally, the trade unions have played a big part in the election of Labour party leaders, like Corbyn, who were unlikely to win a parliamentary election, thereby perpetuating the rule of Tory governments dedicated to promoting the interests of the richer sections of society.

And worse still, even in opposition Corbyn failed to protect the interests of the working classes. He did this by his abysmal failure to understand the significance of Tory economic policies. For example, when the Chancellor of the Exchequer had finished presenting the last budget, in which taxes were reduced for the rich at the expense of public services that benefit everybody, especially the poor, the best John McConnell could do – presumably in agreement with Corbyn – was to stand up and mock the Chancellor for having failed to fulfill his party’s old promise to balance the budget by this year! Obviously neither he nor Corbyn understood that had the government done so the effects on working class standards of living would have been even worse. Neither of them seems to have learnt that the object of fiscal policy is to balance the economy, not the budget.

Instead, they have gone along with Tory myth about the importance of not leaving future generations with the burden of debt. They have never asked “To whom would future generations owe this debt?” To their dead ancestors? To Martians? When Cameron and his accomplices banged on about how important it was to cut public expenditures because the average household in Britain owed about £3,000, they never pointed out that this meant that the average household in Britain was a creditor to the tune of about the same amount (after allowing for net overseas lending). Instead they went along with all this balanced budget nonsense. They did not understand that balancing the budget was just the excuse needed to justify the prime objective of the Tory Party, namely to reduce public expenditures in order to be able to reduce taxes on the rich. For Corbyn and his allies to go along with an overriding objective of balancing the budget is breathtaking economic illiteracy. And the working classes have paid the price.

One left-wing member of the panel on Question Time last week complained that the interests of the working classes were ignored by “the elite”. But it is members of the elite who have been most successful in promoting the interests of the working classes. The most successful pro-working class governments since the war have all been led mainly by politicians who would be castigated for being part of the elite, such as Clement Atlee, Harold Wilson, Tony Crosland, Barbara Castle, Richard Crossman, Roy Jenkins, Denis Healey, Tony Blair, and many others too numerous to list. They brought to politics not only a burning desire to improve the lot of the working classes (from which some of them, like me, had emerged) and reduce inequality in society but also an understanding of how free market economies work and how to deal with its deficiencies. This happens to be more effective than ignorant rhetoric that can only stroke the egos and satisfy the vanity of demagogues

People of stature like those I have singled out above seem to be much more rare in politics these days. But there is surely no need to go to other extreme and persist with leaders like Jeremy Corbyn, a certain election loser, however pure his motives and principled his ambitions.

Wilfred Beckerman is an Emeritus Fellow of Balliol College, Oxford, and was, for several years in the 1970s, the economics correspondent for the New Statesman