Uncontrolled Spending on Nukes and War in Ukraine – The Tory-Labour Election Pact

On 12 April, Keir Starmer announced that Labour would commit to increase UK defense spending to 2.5%. While the Conservative Party has been talking up the need to increase defense spending to 2.5% of GDP for some time, Rishi Sunak made his formal announcement on 24 April. On the eve of Rishi’s reveal, the UK Defense Journal declared ‘Britain to boost defense spending due to threat from Russia!’  Out of the blue, spending 2.5% of GDP on defense had become a joint Tory-Labour commitment.

For voters, at a time of an ongoing proxy war in Ukraine, Israeli atrocities in Gaza and growing fear of China, spending an extra 0.5% of GDP on defense a headline grabber. But why is there no debate between the two main political parties in the UK general election campaign about foreign, security and defense policy?

The Tories and Labour have been completely silent on how much this additional 0.5% will cost in hard-earned, tax-payers’ cash.  At a pre-election debate, the phrase ‘2.5% on defense’ slipped off Deputy Labour Leader Angela Rayner’s tongue quicker than the sale of her council house in Stockport.  In its review of the Conservative Manifesto, the Institute for Fiscal Studies only refers to increased defence spending in percentage terms, and not in pounds and pence.

In fact, the Tory-Labour pact on defense spending will cost in excess of £13bn each year. Apparently, cutting the size of the civil service and cutting benefits will largely fund this. Although no actual plans for this have been set out.  So we should assume an increase in UK government borrowing which has now risen above 100% of GDP, with a government deficit that is currently twice as high as the limit set within the European Union (3%).

Let’s be clear, the Tory-Labour plans for defence spending exceed the total cost of their respective election spending pledges. Labour spending plans top off at around £10bn and Keir Starmer and crew can barely breathe without being pressed on how they’ll fund breakfast clubs for primary schools, or a warm house plan to stop elderly people dying because they can’t afford to pay for heating.  The Conservatives are looking to cut taxes, despite massive debt and a large deficit. But where they are planning to spend more, for example on Sunak’s bizarre kids’ army, those costs fall far short of the assumed Tory-Labour increase in defense spending.

And what the public doesn’t know is that most of the new money for defense has already been spent. The UK already spends 2.3% of GDP following a huge recent splurge.  The remaining 0.2% will disappear quicker than a British Minister’s deleted WhatsApp messages.

But this money isn’t giving us anything new.  In fact, the day-to-day budget this year to pay for the lads and lasses on the front line of our defense has been cut by £2.5bn. Many service personnel worry about whether they’ll have a house to live in. Submariners talk about the increased stress of longer deployments which have been driven by the need to cut costs.

No, this 0.5% increase in defense spending will be shuffled towards completely out of control spending on the defense procurement program and the proxy war in Ukraine.

In March 2024, the Parliamentary Public Accounts Committee reported that the Ministry of Defense has been consistently unable or unwilling to control the spiraling costs and delivery schedules of its 1800 (that’s right, eighteen hundred) defense projects. The MoD has a woeful track record: whether it’s a £430m overspend on the Warrior program or £2.5bn over on new aircraft carriers, a 59% delay in delivering the Challenger 3 tank or an extra 7 years for Dreadnought.

On 4 December 2023 the National Audit Office produced a review of the MoD’s equipment plan for the next decade concluding that it was ‘unaffordable and facing the largest budget deficit since the plan was introduced in 2012’.  Note here that the current plan was developed two years before the Ukraine crisis started.  So the motto for UK defense procurement should be ‘delivering last decade’s technology in the next decade at whatever cost.’

According to the MoD’s estimates, the costs of the equipment program have shot up by 27% or £65.7bn over the past year alone. And that is based on their ‘most likely’ scenario for spending. In the ‘worst case’, the total increase in cost will amount to almost £80bn.  Add in other expected cost overruns that the MoD reassures us can be absorbed by efficiency savings, then the cost shoots up to over £104bn. The Public Accounts Committee noted that these estimates do not account for an estimated £12bn in additional requirements for the Army.

By far the biggest area of budgetary pressure is in the nuclear program which is currently overspent by 62%. These include the much-delayed ‘Dreadnought’ submarine as a replacement for the SSBNSs that carry the UK’s nuclear missiles.  There is a joint UK-US project to build a new class of submarines to counter the apparent threat from China under the AUKUS program; however, the current generation of Astute class fleet submarines in the UK has only been operational for ten years. We have a program to design a new nuclear warhead with the US, as if having 225 nukes wasn’t enough. None of these massively costly projects are giving us capabilities that we don’t already possess. While they are undoubtedly strengthening the UK’s military industrial supply chain, they aren’t making us safer.

After expensive nukes, the Tories and Labour are jointly committing to prop up proxy conflicts. £3.9bn will be allocated from the Treasury reserve in the current financial year, principally to fund the UK’s weapon shipments to Ukraine, but also the cost of supporting US strikes against Yemen. As I understand it, this ‘reserve’ funding for proxy conflicts will become normalized within the defense budget from 2025/6, after the general election dust has settled.  With practically no parliamentary scrutiny, a massive financial commitment to the government in Kyiv has been baked into the government’s spending plans under the next parliament.

There has been no discussion of either expensive nukes or support for proxy conflicts by the Conservatives or Labour in the election campaign. The UK is practically the only country in the western alliance where any discussion of defence spending on nuclear weapons or war in Ukraine is almost completely stifled, by the government, the main opposition party and the mainstream media.

Afraid to show weakness, the Labour party has refused to chart its own policy on foreign defense and security policy. As they will most likely win the election, we should assume big spending on nukes come what may, and on proxy conflicts until a negotiated settlement is reached in Ukraine and Israel/Gaza (arguably the flashpoint for Houthi strikes against western shipping).  A brief attempt to shift debate towards spending more on international engagement including through overseas aid and diplomacy evaporated. UK electors now face a terrifying lack of choice, with both the Tories and Labour preferring war-war, over jaw-jaw.

Ian Proud is a former British diplomat and was the Economic Counsellor at the British Embassy in Moscow from July 2014 to 2019.  While in Russia, Ian advised UK Ministers on Russia’s political economy, and that of neighbouring former Soviet states, including Ukraine. He recently published his memoir, a Misfit in Moscow: how British diplomacy in Russia failed, 2014-2019.