In our February survey, ahead of the Budget, we found that three-quarters of our panellists said they would rather that Jeremy Hunt prioritise increasing defence spending over cutting taxes.
Despite that, and a determined campaign by Conservative MPs, the Chancellor at that point (less than two months ago) decided not to announce a penny more for the Armed Forces. Yet here we are, not two months later, and the Government is touting an extra £75bn – and the Rishi Sunak is saying it won’t even get in the way of cutting taxes.
In current circumstances, any extra funding for the military is welcome (although given the Ministry of Defence’s track record on procurement, it remains to be seen how well the money will be spent). However, the announcement does invite a couple questions.
The most important of these, in policy terms, are about that headline sum of £75bn. As analysts immediately pointed out, this number is something of a sleight of hand: rather than presenting us with the annual boost to defence spending these plans represent, the Treasury has instead taken the entire implied boost over six years and lumped it together.
That doesn’t mean the number isn’t real. But it is an obvious barrier to public understanding of the actual scale of the spending involved. Ministers can wring a large face value out of even a small increase in spending if they simply calculate it over enough years. Like constantly talking about GDP instead of GDP per capita, discussing spending except in per-annum terms is at least a little dishonest.
Much more dishonest, however, is the method by which the Treasury has arrived at the £75bn figure – which appears not, in fact, to be real at all.
As Ben Chu of Newsnight has pointed out, the new spending plans over deliver an extra £75bn over six years if you assume that defence spending would otherwise have been completely frozen in cash terms over that period. That would mean six years of real-terms cuts and would, by about year five, have put the United Kingdom in breach of its NATO spending commitments.
Was that the plan? If not, Ben Zaranko of the IFS details how the real increase is likely much smaller: were existing defence spending instead to have been frozen as a percentage of GDP, the six-year boost is just £20bn. The Treasury seems to agree with him, at least in part, as the official annual cost estimates of this new package assume a much higher spending baseline than does the £75bn face value they’ve put on it.
In other words, that number is only real if the Government was previously planning six years of defence cuts and to breach our treaty obligations to NATO on spending – and if they were, then the annual cost of the package would be substantially higher than the official figure of £4.4bn in 2028/9 (and probably couldn’t have been paid for out of unspecified cuts to the Civil Service).
Ah well, there’s nothing new to that; much of British politics is fake these days, especially when it comes to spending. But beyond the substance of the policy there is another important question: what on earth is up with the timing?
Sunak and Hunt took a fair bit of political heat to resist widespread calls from their Party to boost defence spending at the Budget, only to pull this announcement out of the hat less than two months later. If Downing Street were planning to hold some announcements back until a pre-election fiscal event in the autumn, why shoot this bolt now?
A straw in the wind, perhaps, that the Prime Minister may yet be considering going to the country over the summer.