This article first appeared on Labour Outlook
Fiscal responsibility dominated Labour’s election campaign, just as the £22 billion hole in public finances is now dominating government spending plans. Carol Turner asks why the Prime Minister’s ‘serious commitment’ to increasing military spending to 2.5% of GDP is the only promise that goes uncosted and unchallenged.
As revelations of a black hole in public finances and chaotic Conservative mismanagement emerge, the Big Question remains. How will the Labour government pay for its policies?
The two-child benefit cap stays; winter fuel payments are scrapped for all but the poorest pensioners; and social housing tenants face 10 years of above-inflation rent increases. Every day we’re warned that the Chancellor’s autumn statement will be grim.
Remarkable then that one manifesto commitment is absolved from scrutiny – the pledge to raise military spending to 2.5% of gross domestic product. Keir Starmer’s military budget commitment remains uncosted – an irksome outlier amongst the Chancellor’s non-negotiable fiscal rules.
There has been
nothing said about how much it would cost
nothing asked about where the money might come from, and
absolutely nothing acknowledged about what cutbacks it’s likely to mean for other government departments.
Labour’s manifesto undertook to conduct a Strategic Defence Review (SDR) to ‘set out the path to spending 2.5% of GDP on defence’. Within two weeks in office Keir Starmer announced the SDR, conducted by Lord George Robertson, a former NATO Secretary-General, and overseen by Defence Secretary John Healey, who will report to parliament in the first half of 2025.
A foretaste of what 2.5% GDP will mean
Institute for Fiscal Studies (IFS) Director Paul Johnson was a rare exception to the silence on costing military spending. He questioned Rishi Sunak’s commitment to 2.5% in a Times article in April, objecting to ‘the misleading and opaque way in which the additional [military] spending was presented’.
‘When it wanted to make it look big, the government claimed it would boost spending by £75 billion; when it wanted to appear fiscally responsible, it claimed it would be cheap as chips, costing only £4.4 billion in 2028-29 and easily paid for by undoing some of the recent jump in civil service numbers. These figures, said Johnson, do not compute. The PCS union has suggested it will cost an extra £20bn, found by cutting 70,000 civil service jobs.
In June, the IFS published an estimate of changes in departmental budgets under spending plans for a new parliament. The first point to note is that unlike most departments – housing, transport, local government, etc– the MoD’s budget is ‘protected’, meaning inflation-proofed, alongside health, education, childcare, and overseas development.
The IFS chart below showed that unprotected government departments could take a budget hit of between 1.9% and 3.5%.
Military spending in context
A recent report by the MoD sets Starmer’s commitment to 2.5% military spending in perspective. The MoD budget already tops the NATO spending guideline for member states which was set at 2% of national GDP in 2006. Britain has met this target every year since as has the USA, the only two members to do so.
The trends below suggest good reasons to consider reducing rather than increasing Britain’s military spending. Key take-aways from the MoD’s Finance and Economics Annual Statistical Bulletin 2024, include the following:
Britain’s current military spending
UK’s military budget was 2.3% of GDP in 2023, amounting to between $73.5-$75bn.
The amount the UK spends on the military increased by an average of 2.1% between 2014-2023, representing an extra $13.1 billion.
In 2023, Britain was the 5th highest military spender in the world according to the International Institute for Strategic Studies; the Stockholm International Peace Research Institute ranked the UK 6th.
Britain’s record among NATO members
Britain is the 2nd largest spender in NATO, after the USA, with the 4th biggest population. UK military spending would be an even higher percentage were it calculated as per capita GDP.
Total spending by NATO members made up 55% of global military expenditure in 2023, a combined total of US$1,305 billion and a 3% real terms increase on 2022.
Only 10 of the 32 NATO members met the 2% guideline in 2023.
The longer-term picture
International military spending fell from the mid-1980s, as the Cold War drew to a close. It continued to decline in the 1990s, although UK and US military spending briefly increased as a result of the 1990-91 Gulf War.
The global decline ended in the early 2000s as a result of military activity in Afghanistan and Iraq, and has remained relatively stable since in the UK, France, and Germany. However, US defence spending has varied. As a result of military incursions in the Middle East, it rose sharply to peak at over 5% GDP in 2009, before dropping to 3.23% in 2023.
With few exceptions, military budgets have shown a more sustained increase in recent years. This is a trend which international institutions anticipate is likely to continue.
Global Campaign on Military Spending UK points out that new data from Stockholm shows a growth of 6.8% above inflation in 2023, to $2.44 trillion – the highest level since the end of the Cold War. The UK’s percentage increase was 7.9%, higher than some of the largest NATO members including the US and France.
Military spending is a political choice
Allocating resources to the MoD is a political choice like any other. Questioning priorities should be the concern of us all, and the costs of doing so transparent. As Richard Norton-Taylor puts it: ‘Military strategy should be based on an assessment of genuine risk. Ultimately, however, it is a matter of political choice.’
He uses the example of funding Trident – ‘at a cost of more than £200bn, a figure the MoD does not dispute’ – while deploying British troops to Afghanistan and Iraq without adequate body armour. Starmer’s commitment to Trident also comes without a price tag.
There are many well-documented examples of senior military personnel questioning the effectiveness of Britain’s nuclear weapons system, and of army, navy, and air force officers questioning the priority accorded their branch of the services. Veterans and veteran organisations highlight the lack of support for ex-soldiers, and politicians with military background have expressed concerns about the care of serving soldiers.
The UK government publishes a National Risk Register (NRR), based on National Security Risk Assessments which evaluate the most serious dangers facing the UK. Risks include accidental and malicious threats from abroad and at home, from cyber terrorism to natural disasters and environmental hazards.
The NRR offers a measure against which to assess the role of military, as opposed to other responses to the entirety of threats Britain faces. Military power has little impact on many – such as health pandemics and climate emergencies like floods and heatwaves. These considerations also need to be factored in when assessing how funding is allocated.
The SDR recently invited public contributions to the Review in the form of a call for evidence which closes on 30 September. Ability to participate is limited to short responses to a series of tightly controlled technical questions. There is no provision for – or expectation of – submissions outside the narrowly defined parameters set by the questions.
Restricting the ability to participate in the SDR process is in no one’s interest. The public and the media must be able to interrogate the rationality of the choice to raise military spending before the SDR reports next year. When it does you can be sure it will take us further along the government’s ‘trajectory to 2.5%’.
