Rachel Reeves is said to be digging her heels in over a major increase to defence spending, despite warnings that Britain is “in peril” as a result of its ailing military.
The armed forces are thought to be facing a financial black hole of around £28bn over the next four years, but the chancellor has reportedly only approved plans for a “limited” increase to the Ministry of Defence’s budget amid concerns over how the Iran war will affect the public finances.
Sky News reported that defence chiefs will meet this week to discuss what is expected to be a £3.5bn cut to the military budget for the current financial year.
And UK military chiefs have been asked to find billions in “efficiencies”, despite Sir Keir Starmer saying he is readying his armed forces for war, the broadcaster reported.
The chancellor’s proposal for an increase to the defence budget of just £10bn, reported by The Times, comes as she draws up plans for a targeted energy bailout for vulnerable households.
Rachel Reeves is also expected to slash plans to hike fuel duty in September, a policy that is expected to cost around £2.6bn.
Sources told the newspaper that Ms Reeves is not willing to break her fiscal rules or increase taxes to ramp up defence spending.
This is despite several stark warnings from key military figures in the face of growing global turbulence, with escalating conflict in the Middle East and the ongoing war in Ukraine.
On Tuesday, a number of former defence secretaries and Labour grandees rowed in behind a former Nato secretary general, who warned that the UK’s security is “in peril” as a result of the “corrosive complacency” of Sir Keir Starmer.
George Robertson, a former Labour defence secretary who was appointed by the prime minister to write the government’s Strategic Defence Review (SDR), used a speech on Tuesday to accuse “non-military experts” in the Treasury of “vandalism” and to claim Sir Keir is unwilling “to make the necessary investment” in Britain’s defence.
Piling in on Lord Robertson’s criticisms, Sir Malcolm Rifkind, a former defence secretary, argued that the government’s “prime responsibility” is defence, and called for ministers to fund this through a cut to welfare or an increase in income tax.
Jack Straw, who was foreign secretary under Tony Blair, praised Lord Robertson’s intervention, telling The Independent: “As George points out, there is a great urgency to settle the defence spending programme at a level which meets our needs, now and in the future, and with that make necessary decisions to cut non-essential welfare spending.”
Meanwhile, former Tory defence secretary Ben Wallace said: “Lord Robertson, like the rest of us, has become increasingly frustrated with a prime minister who talks the talk but doesn’t follow it up with funding and action. The PM needs to show leadership, not spin, on our defence.”
And on Wednesday, Fiona Hill, a former White House chief adviser and another co-author of Britain’s SDR, also joined Lord Robertson’s criticisms, warning of a “bizarre” lack of urgency in defence planning.
She told The Guardian: “What George is saying, very bluntly, is there is basically a lack of resolute leadership on this. Because everybody’s worried about votes and, you know, reactions, and all of this on the left and on the right.”
Downing Street hit back at Lord Robertson’s assertion that Britain was “underprepared” and “underinsured”, with the prime minister’s official spokesperson saying: “I completely reject that. Our Armed Forces, as I say, are working around the world every minute of the day to keep us safe at home.”
Asked whether the prime minister will cut welfare to boost defence spending, his spokesperson said it is “vital we make the right decisions”, adding that the PM is “determined to ensure the defence investment plan is fit to meet the threats we face”.
But he added: “You heard the prime minister where he talked about how he has a lot of respect for Lord Robertson but on this particular issue he disagrees. We’re looking at the largest sustained increase in defence spending since the Cold War"
The government has promised to publish a 10-year defence investment plan to fund the SDR, but it has been beset by repeated delays – something that has sparked criticism and concern from MPs on both sides of the Commons.
Meanwhile, in-year savings were blamed for a delay in sending HMS Dragon to Cyprus weeks after the Iran crisis began and the UK’s base on the island came under attack from Tehran.
There are also ongoing questions about the reduction of the size of the army, which is down to around 70,000 personnel and using poor and outdated heavy vehicles and tanks.
Sir Keir told MPs on Monday that the government was working to finalise the defence investment plan, but he did not want to repeat the mistakes of previous administrations because “we inherited plans that were unfunded and not deliverable”.
The government has committed to spending 2.5 per cent of gross domestic product on defence by 2027, increasing to 3 per cent in the next parliament and a Nato-agreed target of 3.5 per cent by 2035.
Ms Reeves is set to meet her US counterpart Scott Bessent in Washington on Wednesday after he argued “a small bit of economic pain” caused by the Iran war was worth it to prevent Tehran from getting a nuclear weapon.
The comments by the US treasury secretary put him at odds with the chancellor, who has gone public with her anger and frustration at the “folly” of America’s actions in the Middle East and its financial fallout on families.
The pair were due to hold face-to-face talks during the spring meetings of the International Monetary Fund, which will be dominated by the ongoing crisis in the Gulf. The war has inflicted a global economic shock and sent energy prices soaring.
A government spokesperson said: “We have delivered the largest sustained increase in defence spending since the Cold War – taking the total investment to more than £270bn across this parliament.
“We are finalising our Defence Investment Plan that we will publish as soon as possible, rebuilding British industry to make defence an engine for growth and doubling down on our own commitment to Nato.”
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