In April 2024, when Grant Shapps (who was then the defence secretary) announced that the UK was going to spend an extra £75bn on defence, the shadow defence secretary John Healey pointed out that this figure was arrived at by some decidedly dodgy maths. The Sunak government had cooked up the number by pretending that defence spending would otherwise not have changed at all between 2024 and 2030, and added up the difference between that (impossible) scenario and its plan to spend 2.5 per cent of GDP on defence by the end of the decade. It was a plan to spend more, but the figure was grossly overstated. Healey rightly told the Commons the £75bn was a “fake figure”.
Healey – now the Defence Secretary – was a little quieter on the maths of Keir Starmer’s announcement from Downing Street yesterday that defence spending would benefit from “an increase of £13.4bn year on year compared to where we are today”. This isn’t as grotesque a maths crime as the previous government’s claim, but it uses the same trick. Technically, we will be spending £13.4bn more on defence than we are today, but the decision the government has made is to spend an extra 0.2 per cent of GDP, which at that point will probably mean an extra £6bn of spending per year.
The reason this is important is that, unlike the previous government (which pretended it was going to sack a load of civil servants, and never did) Starmer also explained how the government is going to pay for the rise to 2.5 per cent – by cutting about £6bn from overseas aid. As Andrew Marr writes this week, this is a “brutal choice” that underscores just how ruthless Starmer is now prepared to be.
What the Prime Minister didn’t explain was how the country will afford his further ambition to take defence spending to 3 per cent of GDP in the next parliament. Ben Zaranko, of the Institute for Fiscal Studies, told me this would involve a further £10bn commitment per year. The only way to pay for this is through taxes or cuts: “If it’s a permanent, recurring increase in defence spending, you can’t sustainably borrow for that. You have to pay for that through higher taxes or lower spending.” We can probably look forward to the stealth tax of frozen thresholds being extended beyond 2028, or an additional penny on income tax, to make up the difference.
The other crucial point Healey made last year was that in 14 years of Conservative government, “at least £15bn” had been wasted on “mismanaging defence procurement”. Normally, a government plans to do something and then tries to figure out how much it will cost; the defence spending commitment is a plan to spend a lot of money, with details of what it will achieve to follow. A key aim is to not be invaded, but beyond that the details begin to waver.
Defence spending is an area that is already something of a procurement disaster. There are reasons for this. You’re not allowed to tell the public too much about what you’re spending the money on, or who’s spending the money, because then you’re telling the enemy how many bombs you have, and you probably shouldn’t do that. There are also very few companies you can go to if you want to buy, say, an aircraft carrier, and the list is made shorter still by the fact that you will probably be told to buy it from a British manufacturer.
Some of these companies are also rather effective and persistent at lobbying, and the revolving door between government and the defence industry spins so consistently it could be used to power a small town.
It would, therefore, be a very good idea if the plan to increase Britain’s defence spending was accompanied by a plan to make that spending more transparent and accountable. Duncan Hames, director of policy at Transparency International, says there are “parts of defence procurement which you can still do in an open and competitive manner, even if certain information about the capabilities of what you’re procuring don’t end up in the public domain”. Hames warns that without better safeguards about the way defence spending decisions are made, we might end up with a repeat of the spending rush that happened during the pandemic: amid the “necessary haste” of emergency spending, “a huge amount of waste, some opportunism by those that wanted to win contracts, and big questions about privileged access”. If we allow that to happen again, Britain’s defence will become even harder to pay for.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here
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