I was just logging on to make a presentation at a European defence workshop, when Lord George Robertson’s ‘weapons not welfare’ speech broke in the media: "We cannot defend Britain with an ever-expanding welfare budget."
Like many interested in this sector, I wasn’t expecting the attack on government defence spending to come from the man who led the defence review. When you dig into the speech, his focus was on the pace of change and the delay in publishing the 10-year investment fund. As a former Defence Secretary, he clearly recalled his battles with the Treasury, accusing ‘non-military experts in the Treasury’ of ‘vandalism’. The Treasury has long been sceptical about increasing defence spending, not on ideological grounds but on grounds of deliverability. With some justification, they point to poor defence procurement, which is some way short of ‘vandalism’.
On the warfare versus welfare argument, the Chancellor has signalled her unwillingness to raise taxes to fund additional defence spending. She has warned that ‘difficult choices’ are required to increase defence spending, and other budgets may have to be cut, including welfare. Other ministers have been more explicit, including Wes Streeting, the health secretary, who suggested that welfare cuts could be required because it was critical to deal with the ‘challenge of the world we face’. The UK has already cut international development spending to fund additional defence spending, although there is a broader policy shift towards repurposing development aid.
It may sound like a straightforward trade-off, but in public spending terms, it is more complex. Welfare budgets have mandatory elements and can be demand-led, while defence spending is discretionary. In the US, this has been called the ‘Guns and Butter’ economic model. In the UK, defence is part of ‘final’ public expenditure, funding the armed forces’ pay and the weapons and equipment they use. This consumes money that can’t be allocated elsewhere in the budget and consumes a share of national output when the government spends it. In contrast, the welfare budget consists mainly of ‘transfer payments’ that shift income between households. Alan Shipman explains this in more detail.
Tony Benn famously said, “If we can find the money to kill people, we can find the money to help people.” This leads to the concept of military Keynesianism, which offers an increasingly tempting way for governments to combine the economics of full employment with the rhetoric of national security. The UK defence review implicitly invokes this to justify defence spending, highlighting the positive impact on jobs and local economies. The European Commission has proposed exempting total defence expenditure from EU fiscal rules for four years. Germany has already begun rearmament by suspending its constitutional debt brake.
The problem with military Keynesianism is that economic growth in pre-WW2 Germany and the USA was
rising before warfare drove military expenditure, and the economic multiplier depends on a
range of factors – not least how much is procured in the UK rather than imported. Russia is a war economy, yet it is not benefiting from the technological gains typically associated with a war economy. Research
shows that the current state of its military industry is one of regression. Production will likely have to be simplified and slowed over the coming years, while Russia will be forced to accept reduced output quality and will suffer from ‘innovation stagnation’ in its technological research and development.
The UK Government would be wise to rely less on military Keynesianism and instead focus on the most significant threats. Despite the Iran War and the growth of China’s military capacity, Russia remains the primary threat. I have just finished reading
If Russia Wins by Carlo Masala. He starts with the scenario of an attack on Narva in Estonia after Ukraine has been forced into a land-for-peace deal by the USA. If this sounds fanciful, the Russian Duma has just passed a law letting Putin deploy troops anywhere on Earth to “protect Russian citizens.” Estonia and Latvia both have large Russian-speaking minorities on Russia’s border. Masala’s scenario highlights the likely impotent response from NATO, given pro-Putin governments in Europe and the USA, and the impact of hybrid warfare. Kristan Stoddart's
new book,
Russia's Hybrid Warfare Offensive Against the West (de Gruyter, 2025), is worth a read on this. We also need to be less reliant on the USA, which, under the current administration, is an unreliable ally.
It is a simple fact that the UK is unprepared for these threats. As Andrew Neal
argues, "The country’s leaders need to spell out what these threats mean for the UK. They must also be honest about our minimal defensive capabilities." War may come whether we like it or not, and being unprepared would be reckless. The UK Government can fairly dismiss the opposition’s attacks, as many of the problems facing the UK armed forces stem from decisions made by the Tories.
Instead, the UK Government should focus on ensuring that the necessary extra spending is well spent. As Richard Norton-Taylor
argues, “Mandarins in the Ministry of Defence and successive defence secretaries have failed to confront the armed forces’ top brass – senior military figures who have a vested interested in preserving the status quo and continuing to fighting the last battles, reluctant to accept new geopolitical realities and new technologies.” The defence environment is changing rapidly, as evidenced by Ukraine’s use of drones and
robots. It is therefore little wonder that the Treasury is reluctant to agree to the MoD’s demands, including signing off on the defence investment plan.
This requires a radical
reform of defence procurement, including training and development. The UK’s defence industry is struggling to attract and
retain talent at precisely the moment it could be most needed. Almost half of all engineering and technology businesses in the UK report recruitment difficulties. The UK has an engineering and manufacturing graduate share below competitors such as Germany, Japan, Italy and France. The shortfall is costing the UK economy an estimated £1.5bn annually.
In summary, there is no alternative to additional defence spending to counter real threats to our security. However, 'weapons, not welfare' is poor framing, and so is military Keynesianism. Defence spending also needs to be delivered more effectively, along with a revised industrial strategy.
